FMV Rental Rate When Filing Taxes

[Brandon Bell]

My wife and I work on the road and have roommates who occupied the residence for the entire year of 2022. I was informed that as long as we were not charging over the FMV rental rate it would not be taxed as income. At the time I just got comps from our roommates who were seeing (apartment) rents for around $1,600. We charge them $1,500. I did not file this as income for the year 2022 since this is still our primary residence.

1) Is it correct that the rent must be under the FMV?
2) How do I calculate the FMV?
3) Would it help to have an agreement between roommates and us that we are charging less than FMV?
4) What other items should I consider?

[Michael Plaks]

"I was informed."  Nice.

No, you were misinformed. Talking to friends or watching YouTube is not the way to learn about taxes.

Now you need to redo ("amend") your 2022 tax return, because you did not do it right, and pay the extra tax. Maybe extra taxes, and maybe not. See, $1,500 instead of $1,600 to people who you know and who will take good care of the property can be considered FMV. You then have all the rental deductions available, including depreciation.

P.S. Please don't get "informed" about depreciation from the same source who told you that your rent is not income.