If you rent a property for less than fair market value, the IRS generally treats it as not rented for profit. You must still report the rental income that you receive for this activity. According to IRS Publication 527, not-for-profit rental income is reported on Schedule 1, rather than on Schedule E.
You cannot deduct rental expenses that exceed the income received. If you itemize deductions, certain personal expenses related to the property, such as mortgage interest and real estate taxes, may be deductible on Schedule A (if you choose to itemize deductions). See IRS Publication 527 for more information about what qualifies as renting for profit.
See Form 1040 - Other Income Attached for details on entering other income in TaxAct. You will need to enter a description, such as “not-for-profit residential rental,” when entering the amount.
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