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RENTING below fair market value Posted on Aug 20, 2019

When you rent space to relatives, often they pay you rent below fair market value or no rent at all.

You DO NOT report this amount in your income, and you CANNOT claim rental expenses. This is considered a cost-sharing arrangement, so you CANNOT claim a rental loss.

If you lose money because you rent a property to a person you know, for less money than you would to a person you don't know, you CANNOT claim a rental loss. 

When your rental expenses are consistently more than your rental income, you may not be allowed to claim a rental loss because your rental operation is not considered to be a source of income.

However, you can claim a rental loss if you are renting the property to a relative for the same rate as you would charge other tenants and you reasonably expect to make a profit.

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