Mom Rents Basement to Son

[Burke]

Does it make a difference if the son is mentally challenged?

Perhaps only if she is wishing to claim him as a dependent and he has no other means of support.

[AJsTax]

Why would you want to show the income?

Sharing the costs of a home and food, etc is not considered taxable income.

[zeros]

Mentally Challenged?

Does it make a difference if the son is mentally challenged?

[Burke]

Mom is currently renting her basement to her son. She is thinking about putting her son's name on her title for her home. Would she be allowed to rent to her son and deduct portions of the heat and lights as he is now considered part owner?

Use of a dwelling unit by the TP, family member, or any person who has an interest in the property is considered personal use for purposes of allocating expenses. An exception exists if a family member uses the dwelling as their main home and fair rental value is paid. Use of a dwelling unit by any individual who pays less than FRV is considered personal use by the owner; therefore no expenses attributuable to that period of rental are deductible. Rental income must nevertheless be reported as income. [IRC 280A(d)(2)]

[Burke]

To treat as rental, you must charge FRV. Paying a "little rent" does not make it a rental property when it is a related party.

[AZ-Tax]

Actually, I have a similar question

New client has son living in their other house for past 2-3 yrs. I think he paid a little rent but client told me they did not know they could deduct the rental. Maybe amend past 3yrs?

[zeros]

Mom is currently renting her basement to her son. She is thinking about putting her son's name on her title for her home. Would she be allowed to rent to her son and deduct portions of the heat and lights as he is now considered part owner?