Tax relief (write-offs) when renting to family?

[prefekt]

Does anyone know the laws regarding tax reliefs when renting to family? If someone were to rent his/her property (purchased strictly as an investment) to a direct relative, would he/she be able to write off the rental income? Would the tennant need to have a roommate who was unrelated who was signing the cheques?

 

[rbt]

I am not a tax consultant (consult one!) but as far as I know the rules are the same as renting to anybody else. Nothing special for blood relations.

You can claim and are liable for all of the usual stuff as you would for any other tenant with a signed contract.

 

[investor]

Does anyone know the laws regarding tax reliefs when renting to family? If someone were to rent his/her property (purchased strictly as an investment) to a direct relative, would he/she be able to write off the rental income? Would the tennant need to have a roommate who was unrelated who was signing the cheques?

Write off? You write off EXPENSES, not INCOME. I believe what you are asking is whether you can deduct the operating costs of the property from the income. As long as the expenses are legitimately related to the property you can. Also, you would have to rent to your relative at fair market value (or close enough to it that it wasn't questioned). You can't throw your brother in there for $500/month when the market rent is $2000/month (and make up the difference elsewhere...) and deduct the manufactured loss.

Note: I am not giving legal, accounting or tax advice of any kind. I am merely stating an opinion based on the fact pattern described. Please consult with your accountant or tax specialist for specific, accurate information.

 

[prefekt]

Write off? You write off EXPENSES, not INCOME. I believe what you are asking is whether you can deduct the operating costs of the property from the income. As long as the expenses are legitimately related to the property you can. Also, you would have to rent to your relative at fair market value (or close enough to it that it wasn't questioned). You can't throw your brother in there for $500/month when the market rent is $2000/month (and make up the difference elsewhere...) and deduct the manufactured loss.

Note: I am not giving legal, accounting or tax advice of any kind. I am merely stating an opinion based on the fact pattern described. Please consult with your accountant or tax specialist for specific, accurate information.

That's the impression i was under, hencewhy i put forth the question. There's going to be some legitimate consultation over the course of the next week, but I wanted to clear that up beforehand. If past memory serves correctly, which it rarely does, there was something to do with 'arm's length' operating expenses when family was involved that can be deducted. Maybe i should have added a disclaimer like 'this seems odd to me, but...'

 

[nuttym]

That's the impression i was under, hencewhy i put there was something to do with 'arm's length' operating expenses when family was involved that can be deducted. Maybe i should have added a disclaimer like 'this seems odd to me, but...'

I'm not sure if there can ever be an arm's length relationship between family members. Maybe I'm wrong.

 

[prefekt]

That's why i was wondering if an unrelated roommate had to be in the picture.