Tax Law (Questions About Taxes)/Rental Income

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Question
My questions pertains to reporting income from rental property.

Rented real estate used by sister as her residence for less than fair market value for entire year in 2012.  My understanding is that no deductions can be reported against this because it is was rented at less than FMV to a related party, but I must still report the income and can deduct interest and taxes on Sch A.

Where do I report the income I received?  Do I report the income on Page 1 line 21 of Form 1040 (I donít think I report on Sch E)

Thank you

Answer
George,

Thanks for your question.

You've got it right, almost.

The income is reported on line 21 of the 1040.

Any "otherwise deductible" expenses such as mortgage interest and taxes are deductible on Schedule A.  If the interest and taxes are not more than the rental income, you may deduct other expenses to the point you have a zero profit.  The bad side of this is that they are miscellaneous itemized deduction subject to the 2% limitation, so it is not likely to help.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

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I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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