Ullmann & Company, PC
Documentation Supporting a Rental Loss is Required When Renting to Relatives

In a recent Tax Court case, Savello, all rental real estate loss deductions were disallowed. Personal use is deemed when a residence is rented to any member of the family of the taxpayer for less than fair market value. In Savello, the taxpayer rented bedrooms to her daughters at one of the taxpayer’s properties at fair rental value.  However, the taxpayer failed to collect rent from her daughters and occasionally occupied the dwelling herself. Because she failed to produce any evidence substantiating how much rent was collected or how many days she personally resided in the dwelling, theCourt concluded that the taxpayer had failed to meet the burden of proof.  

Source:Savello, T.C. Memo. 2015-24The Tax Advisor, September 2015

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