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    #1

    rental or second home

    Clients bought a house in December of 2008. Their 2 daughters both had to move from where they were living so they decided to rent this house from their parents.

    Daughters are paying around $750 per month. They could get around $1000 for it on the market, give or take a little.

    Trying to figure out how to handle this house. The mortgage is in the name of the parents. The deed is in the name of the parents and one of the daughters. Is this a rental property? or is this a second home of the parents that they are allowing their daughters to live in?

    If you need more information than I have given you, let me know. I will tell you whatever I know.

    Linda
    Tags: None
    #2
    Based on facts and circumstances, I would consider it second home of parents, since rental income is less than FMV by 25%.

    Besides, it is the more conservative approach,.
    ChEAr$,
    Harlan Lunsford, EA n LA

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      #3
      I agree,.,,this is a second home, family use, the only things deductible are the property tax and mortgage interest unless she wants to raise the rent to FMV. Tell her she is loosing money renting it to daughters because she can't take all the expenses. Have her figure out how much she is loosing....who is paying the utilities and upkeep, yardwork, etc?
      Believe nothing you have not personally researched and verified.

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        #4
        ... The deed is in the name of the parents and one of the daughters. ...

        I haven't figured out how you can rent a house to one of the owners.

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          #5
          What you are all saying was what I was thinking to. The girls pay the mortgage payment every month, which is about $750. They help with other expenses too but mom is mostly responsible.

          I don't know that when they bought the house and put daughter's name on deed, they knew she would be living in the house. But anyway.

          Second home - mortgage interest and property taxes deductible.

          Thanks.

          Linda

          Comment

            #6
            And, report the income

            And, report the income on line 21, yes?

            Comment

              #7
              Originally posted by oceanlovin'ea View Post
              What you are all saying was what I was thinking to. The girls pay the mortgage payment every month...
              If they literally pay the mortgage interest then there is no deduction for parents.

              Comment

                #8
                Way too confusing at this stage of the game

                Mom makes mortgage payments. The mortgage is in her name.

                You can't rent to an owner so it can't be considered rent.

                Linda

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