Top 5 Tax Savings Tips When Renting To Your Relatives

Renting property to a loved one may seem like a no-brainer. They’re your family, of course, you want to help them find a good place to call home. Plus, you know and trust them, so surely they’ll be excellent tenants and can keep you well informed about necessary improvements or issues. What could go wrong? Plenty. The truth is, if you’re not careful, renting to relatives can trigger all kinds of tax consequences you may not even be aware of. Fortunately, we can enlighten you on some red flags to look out for. To maintain rental expense deductions you need to ensure you’re renting property. That begins with fully grasping exactly how the IRS classifies rental property. According to the IRS , “a dwelling is considered a residence if it’s used for personal purposes during the tax year for more than the greater of 14 days or 10 percent of the total days rented to others at a fair rental value.” But what does personal use mean? The IRS defines personal use as: Any person who owns an intere