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Tax Law (Questions About Taxes)/2nd home for family member

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Question
I am buying a 2nd home 3 miles away from mine for my mother-in-law.  As I understand it for IRS purposes:
"lending the house to family members or charging them a rate below the market value counts toward the 14 days of personal use" making it a personal property.

But, if she pays below market rent for the property, would it then become a rental property with taxable income vice a personal property with deductible property taxes and interest.

Answer
Whether or not it is a personal residence or a rental, the property taxes and interest are deductible.

the 14 day personal use limitation allows you to rent your primary residence to someone else for any amount of rent and not have to account for that "Less than 15 days during one year" of income as taxable.

If you rent the house for 15 days or more then you do have to account.

So, Yes you can buy a house, rent it to your Mother-In-Law for any amount you choose. You can deduct the reasonable and necessary expenses. if you make a profit on the annual revenue you will have to pay taxes on it. If you rent it for less than your costs, you will subsidize the house with your personal income that has been taxed.  

Tax Law (Questions About Taxes)

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Richard Fritzler

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Specializing in Business and Corporate taxation. Comparing the advantages and requirements of different business entities, such as Sub-S Corporations, LLC`s, Partnerships (Both Limited and General), Doing Business as a Sole Proprietor, or Using a C-Corporation. Issues regarding K-1 distributions, 1040, schedule C, 1120, 1120s. Are you considering domiciling a Corporation in a low tax state? I can review the benefits and misinformation that exists.

Experience

I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

Organizations
National Small Business Owners Association.
Publications
Contributing author to "The Corporate Standard Newsletter".


Publications
Contributing author to "The Corporate Standard Newsletter".
Ezinearticles.com articlesbase.com

Education/Credentials
I have been in the business of assisting business owners in reducing their taxes and liability since 1986.

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