We are currently renting a basement out to some friends of ours. We are asking a fraction of the price of what its worth. I understand the risk of renting without a certificate of occupancy.
The apartment is legal if it weren't for the zoning prohibiting basement apartments, I'd just mention that they have multiple exits, fire extinguisher, smoke alarms, etc.
I now am receiving money from them and I don't know what to do with that money come tax time. I am going to claim it, no doubt about it, but I don't know how I can do this? Should I fear the IRS contacting the building department? Can I claim deductions from the wear and tear of the renter or their utilities?