Real Estate Tax Question: Can I Rent to My Daughter?

You can rent property to a family member, though there is no particular tax advantage in doing so. The Internal Revenue Service forces landowners to recognize rental income as ordinary income. The specific tax treatment, however, depends on whether you use the property as your own personal residence. If the property is not your residence, and you don't use it for personal use more than 14 days out of the year, you can generally deduct the costs of maintenance and marketing. Use caution, however, if you are renting it to a family member at a below-market price because specific rules apply.


Usage Rules

The IRS does not allow you to deduct ordinary repairs or depreciation on property that you use as a home. For tax purposes, the IRS considers your dwelling a home if you devote it to personal use for more than 14 days or for more than 10 percent of the total number of days you have rented the home. For example, if you rented the home at a fair market value for at least 250 days during the year, you can still use the home for personal purposes for 25 days during the year without the IRS designating it as a personal property.


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Renting to Family Members

Note that the IRS requires the home be rented at fair market value. There is no restriction on renting the home to family members. The only requirement is that the home be rented at fair market value. If you rent the home to a family member for less than fair market value, the IRS considers that to be a personal use of the home.


You can rent your home to your daughter -- or anyone else -- for less than 15 days per year. The income you receive for these kinds of rentals is tax-free. However, you cannot deduct expenses as rental expenses.



If you have rental deductions or income to declare, you must file an IRS Form 1040, along with a Schedule E. You do not typically use a Schedule C for this income unless you own a business entity that itself is engaged in the business of renting out property and that owns the property.


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