Can you claim all tax breaks even if you lease to a relative? – Money & ServicesReport
Can you lease a home you purchased to a relative and still claim all tax breaks? Someone told me you cannot do this if it is your relative . They would be paying the rent that would cover the taxes , payment and swim club membership. Also, would be resposible for all repairs. Would also, have to have renters insurance on their contents.
You CAN rent to a relative and STILL claim all of the tax benefits, but you MUST treat that relative the Same WAY as you would treat a stranger.
This means the relative signs a lease, pays a security deposit, pays the rent on time, pays a penalty if the rent is late, and can and WILL be evicted if he/she does not pay the rent.
If you do this, report the rental income and expenses on Schedule E. The IRS does NOT have to know you are renting to a relative, and will NOT ask as long as nothing unusual is reported on the tax return.