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If a person is renting a place that might normally rent for $2000 per month, and landlord agrees to a rent of only $1500 per month so long as the renter does certain maintenance and other chores around the property, must the renter report the resulting $6000 per year discount as income to the IRS?

If there is some question as to what the "normal" rent for the place might be, what is the rule to determine it?

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  • While the IRS may have a thought about wanting to count that as income, it might be a reduction in expense instead. The "normal" rent might be $2,000 for a place without the maintenance issues, but only valued at $1,500 due to the condition of the property. I doubt that any renter claims it as income unless the landlord gives the tenant a 1099.
    – MikeP
    Nov 22, 2017 at 21:00

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must the renter report the resulting $6000 per year discount as income to the IRS?

I would argue yes. You are essentially exchanging services for money - some chores in exchange for $500. Therefore, if we are dotting all our I's and crossing all our T's, the landlord should furnish you a 1099-Misc for your work.

If there is some question as to what the "normal" rent for the place might be, what is the rule to determine it?

Generally, a landlord will take a look at what rental prices are around his/her property, then decide on what the rental price should be. The IRS states that:

A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area.

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