Related Party Rental

[barzillai]

Client rents a home to his brother. Brother has fallen on hard times and hasn't paid very much rent. I am assuming losses are not allowed. Are they simply suspended and carried over or are they gone forever? Maybe added to basis? I have looked in TTB and haven't found anything. If anyone has a reference I would appreciate it.

Thank You

[WhiteOleander]

Loss is not allowed in that circumstance. It is not considered suspended. So, there is no loss to take at a later time.

The loss cannot be put to basis.

[Larmil]

Client rents a home to his brother. Brother has fallen on hard times and hasn't paid very much rent. I am assuming losses are not allowed. Are they simply suspended and carried over or are they gone forever? Maybe added to basis? I have looked in TTB and haven't found anything. If anyone has a reference I would appreciate it.

Thank You

He ain't heavy, he's my brother.

[snowbird]

See TTB section 7-7 Look at the court case for Bindseil. Rent 20% below FMV allowed. I could not find this from the TTB index ... had to page through section 7 ... have a similar situation

ps: I have the DeluxeEdition if that makes any difference as to section. Sorry I said Jackson ... wrong case.

[taxmom34]

this is rental not for profit. you can take some expenses up to the income , and mtg int and real estate taxes on schedule A. but i don't remember what those expenses were and can't find in taxbook, this is my first year with book, but i'm still looking. there is a list on what to deduct first, second and etc

[Gretel]

Since it it his brother the rental is not considered a rental at all. It is personal use property. See Pub. 527. The only expenses he can deduct is mortgage interest and property taxes on Sch.A if this can be considered his second home. Otherwise property taxes only.