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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29558
Experience:  Taxes, Immigration, Labor Relations
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I HAVE AN APARTMENT IN THE BASEMENT ON MY HOUSE. THE WOMAN

Customer Question

I HAVE AN APARTMENT IN THE BASEMENT ON MY HOUSE. THE WOMAN WHO IS RENTING THE APARTMENT, LOST HER JOB AND HAS PAID LITTLE OR NO RENT. I HAVE NOT ASKED HER TO LEAVE BECAUSE SHE HAS THREE CHILDREN AND PROMISED TO PAY BACK THE BACK RENT. CAN I STILL DEDUCT PART OF THE INSURANCE AND OTHER MAINTENANCE I HAVE DONE TO THE APARTMENT. THANK YOU
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

If the person is not related to you and you decided to change a smaller rent - that is still a rental activity and you will be able to report your rental income and deduct rental expenses on the schedule E - http://www.irs.gov/pub/irs-pdf/f1040se.pdf

 

Because rental activity is generally considered a passive activity - in case you have a rental losses - your deduction is limited by $25,000 - see Maximum special allowance

on the page 14 IRS publication 527 - http://www.irs.gov/pub/irs-pdf/p527.pdf

 

Let me know if you need any help.