Roommate = claimed income?

[MoonLiteNite]

I was reading up on claiming income from roommates, yes i know "any" income should be claimed. But i also keep finding info about how it has to be at "fair market value" which my roommates pay wayyyy under that. I actually think if i report my roommate income and then use deductions i could be SAVING money in taxes.

Does anyone know if any good site or have any info on this?
I can provide more details in my case if anyone feels they could give a good answer here.

[Mezzie]

My first year with roommates, we were nowhere near fair market value and took a tax hit. This year we didn't give them random months of free/cheaper rent and were just on the low end of fair market value and we should be getting a huge return. The roommates are still winning since the cost of renting a room is significantly lower than getting their own apartment, but now we're no longer being penalized for being nice and could write off a portion of our repairs.

I hope my experience helps a little.

[Prairie Stash]

Canada makes it a bit more clear. Do you expect to ever pay taxes on the income? If not then its not taxable, you can't claim just for deductions.

There has to be an expectation of profit, on top of the FMV. It doesn't mean you have to profit, it should be expected that you would under reasonable circumstances. Its to prevent fraud where people claim room mates or tenants just for tax deductions, eventually its expected that the extra income will exceed expenses. I would expect the US to be similar, uncle Sam isn't exactly generous and doesn't really want to send you a refund.

Since Mezzie is only writing off repairs its presumed that next year there should be profit, or the year after, eventually repairs are over with and then there will be taxes owed on the income.

[taxedatty]

IRS Publication 527 is your best bet for info on this topic.  https://www.irs.gov/pub/irs-pdf/p527.pdf