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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, line 21.

If you itemize deductions, you can deduct these on your Schedule A:

  • Mortgage interest
  • Any qualified mortgage insurance premiums
  • Real estate taxes
  • Casualty losses

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. You can do this if both of these total more than 2% of your adjusted gross income (AGI):

  • Your rental expenses
  • Other miscellaneous itemized deductions on Schedule A

You’re renting your property for profit if both of these are true:

  • Your rental income is more than your rental expenses.
  • You do so for at least three of five consecutive years.

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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