My daughter receives Social Security disability income and pays me rent. Can I declare this income as not-for-profit rental income?
Yes. If you don’t rent your property to make a profit, report the income on Form 1040.
If you itemize deductions, you can deduct these on your Schedule A:
Any qualified mortgage insurance premiums
Real estate taxes
You can deduct other rental expenses up to the amount of your rental income. You can’t deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. You can deduct these as miscellaneous itemized deductions. However, that’s only if they, along with other miscellaneous itemized deductions on Schedule A, total more than 2% of your adjusted gross income.
If your rental income is more than your rental expenses for at least 3 of 5 consecutive years, you’re presumed to be renting your property for profit. If you rent the property for profit, report the rental income and expenses on Schedule E, rather than on Schedule A.
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This advice is for general information purposes only and may not apply to you. Every tax situation is different. This is not intended to be legal advice. Taxpayers should consult an H&R Block Tax Professional regarding their individual tax situation.