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rental income or sharing expenses?
Old 07-31-2014, 03:13 PM   #1
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rental income or sharing expenses?

In a couple of months we will be moving DW's mother in to live with us, which we all expect to last for a year or two. She insists on paying us some monthly amount to help with household expenses and utilities. Do I need to go through all the hassle of treating and reporting this as rental income, including rental expenses and depreciation? There won't be anything formal like a lease. We will just be extended family living together.

I'm guessing that others here have been in a similar situation at some point. How did you handle it?
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Old 07-31-2014, 03:31 PM   #2
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Quote:
Originally Posted by Cat-tirement View Post
In a couple of months we will be moving DW's mother in to live with us, which we all expect to last for a year or two. She insists on paying us some monthly amount to help with household expenses and utilities. Do I need to go through all the hassle of treating and reporting this as rental income, including rental expenses and depreciation? There won't be anything formal like a lease. We will just be extended family living together.

I'm guessing that others here have been in a similar situation at some point. How did you handle it?

Suggest you take the cost sharing on housing expenses and do nothing different on your taxes. I, not a tax person, don't see you getting rent but do imagine you could create big ugly problems down the line by reporting that sum as rental income. Think homeowner capital gains on home sale exclusion complications.
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Old 07-31-2014, 03:35 PM   #3
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If it's less than the gift tax exemption amount you could just call it a gift.
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Old 07-31-2014, 03:36 PM   #4
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I would not report anything. It's just cost sharing amongst family members. A gift up to $14K is allowed.
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