Client rents out own home for about a year. The rents are below market rate for the area where she lives. Since it's the Bay Area the rental income is still over 5 figures. However, I'm not sure if it would stand the test that the house was rented for profit.
IRS says: Report your not-for-profit rental income on Schedule 1 (Form 1040), line 21 or Form 1040NR, line 21. If you itemize your deductions, include your mortgage interest (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.
Of course, the unwanted result with the new tax law is that the client cannot offset any of her rental income with her mortgage interest and property taxes because she can't itemize (which she would have been able to under the old tax law). She moved back into the home in 2019 which was the plan.
The law says that you can offset the not for profit rental income with expenses up to the income. Another section seems to imply that you can only deduct property taxes and mortgage interest. And if you can deduct other rental expenses and can't use A where do they get deducted? If I put it all on E, there will still be some income. Thoughts?