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I own a home, and my boyfriend lives with me. We agreed he would pay rent similar to what it'd cost to split a cheap apartment in the area, but he has only paid a very small amount, less than what his half of the utilities would be. I just did my taxes as normal and didn't put anything about "renting" the place since I didn't really collect any rent, but another question made me wonder if that was a mistake. Could I claim it as a rental even if he's not really paying rent, and deduct things like repairs and depreciate the property and things like that? Is it even worth looking into, or would it be pointless because the deductions are limited to the income I made or something like that?

Main question:

Can I deduct expenses such as repairs, if I'm charging but not receiving rent? (i.e. the rent is in arrears; I am owed a lot of rent.)

  • I have added to make the question clearer. It looks like you definitely CAN YES make such deductions! – Fattie Aug 3 at 17:11
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This feels like a variation of Paying “rent” to romantic partner that owns the house, and I'd suggest reading the question and all of the answers there.

Keep in mind, the rent one must charge a tenant is "market rate" and if you claim less, you might not pass an audit. If you live in a home that would rent for $2000/mo, but claim $500/mo rental income, along with $15,000 in annual expenses, you might be in for a nasty surprise.

he's not really paying rent

This is the issue for me. And what may trigger an audit.

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  • I have read that question, and Harper's answer about being about to take some deductions is what prompted me to ask this. I am "charging" a reasonable amount of rent but I hardly ever receive it. I imagine that will be pretty common for 2020, since it's been illegal to evict people for not paying rent for most of the year. Surely you can demonstrate you attempted to collect it but the tenant just refused to pay? – Kat Jul 30 at 22:02
  • It's an interesting question. BTW OP, I am sure every "Dad" on here would have the same financial opinion about this b/f, which I need not type :/ When I was a young guy and I once lived in a girl's flat, I paid everything. Everything, every penny of everything. For fear of someone seeing me as a cheap-ass living on a woman. – Fattie Jul 30 at 22:05
  • @JTP it seems the core of OP's question relates to actually unpaid (perhaps .. "never paid!") rent. Tricky one. – Fattie Jul 30 at 22:13
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I'd say

  • if the lodger is actually not giving you the rent, ie, lodger actually owes you for unpaid rent. I would have to say in all circumstances, one would just ask them to leave. (Since you have a personal relationship, I'd guess, that is the very best way to salvage the relationship. Separate out this "business" aspect.)

  • I believe the core of your question is "My lodger actually did not pay $X of the $Y rent, can I deduct it or something?"

In general the answer to that in the US is landlords can NOT make the amount $X a deduction unfortunately. BUT you can indeed just put in the new amount (Y - X) as the income. Obviously that's much lower so better.

However the IRS would probably find it wildly suspicious, BUT, IN FACT, you are totally "white and clear" here, everything you are saying is true.

I'm afraid, we would need someone incredibly expert to work out example dollar amounts.

But at least I've been able to point you to, No, in fact landlords can not deduct "unpaid rent" as an "expense".

Here's a reference ..

https://homeguides.sfgate.com/can-landlord-write-off-evicted-tenants-rent-debt-income-tax-return-54306.html

"The IRS rules for landlords who use the cash accounting method are clear. Since rent debt represents uncollected income, landlords neither report it as income nor deduct it as an expense. However, any actual costs associated with evicting a tenant are deductible. These costs might include the use of a collection agency, legal costs, and cleanup/repairs resulting from a disgruntled tenant.

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  • I'm not asking if I can deduct unpaid rent. I'm asking if I can deduct expenses like repairs if I'm charging but not receiving rent. – Kat Aug 1 at 19:11
  • Also I have asked them to leave but they've refused and I can't force them due to restrictions on evictions due to the pandemic. – Kat Aug 1 at 19:12
  • It's a good question @Kat "if I can deduct expenses like repairs if I'm charging but not receiving rent" I actually believe you CAN do that – Fattie Aug 1 at 19:15
  • I actually believe the answer is simply yes, @Kat , but we need an expert ... – Fattie Aug 1 at 19:19
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    @kat definitely. Expenses are expenses. They are deductible on their own merits as expenses. It has nothing to do with whether you were receiving any income.You don’t need to have income to deduct expenses. The only exception is if the business is money-losing by nature, I.e. a hobby. – Harper - Reinstate Monica Aug 1 at 19:42

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