If you collect rent from a family member is it always seen as income? Residence is child’s primary home and sibling may live with him but will pay rent and part of utilities.
What would be the benefit of reporting it as income? Does your kid want to have it as an income property?
No. Having never dealt with renting out a room, he is unsure. I have read some conflicting info. If it is rented to a non family member does that make a difference?
As a renter, you don’t get any tax break with the rent, so it would never show up on the renter’s tax returns.
Are you a parent who owns a home that your kids will be living in? Is that the case?
Are these college students or post college?
For financial aid purposes…if that is your question…if you are the parent owner, and this is YOUR secondary piece of real estate, you are required to list the equity for this plus the rental income on the financial aid application forms for the years of your FAFSA/Profile.
If you are asking about this for income tax purposes…that’s a different question.
So…please clarify.
“ If you collect rent from someone who lives in a property that you own – even if it’s just a room in your house – you’re considered a landlord and must report the rent you receive as taxable income. … To offset your rental income, the IRS lets you deduct expenses and depreciation related to the rental.”
Will you be listing this property on your taxes as a rental property? Do you plan to take depreciation and deduct expenses? If so, you need to report your rental income as well, at least that is my understanding.
The IRS does not care who is paying your rent to you.
For income tax purposes only:
If the sibling is paying rent, rent income is taxable. (And the owner sibling’s ability to deduct expenses is minimal, due to shared use of space.) If the sibling is merely contributing towards shared household expenses, that’s no more taxable than splitting utilities between unrelated roommates.
As stated in the OP, child owns the home and is his primary residence. He does not plan to use it as a rental property. A sibling may live with him and pay rent to owner (son) to be used towards mortgage payments. It helps both parties out to share expenses so they will also be splitting utilities. These are post college kids.
Thank you @allyphoe. What about an unmarried couple living together?
I know what my accountant would do.
The relationship between the people involved isn’t relevant. Rent is income; expense sharing is not.
There are laws, but there is also cash.
The relationship IS relevant I believe. When my dad moved in with my brother, he started giving him money which he called rent. The accountant said no, it is “shared household expenses” which relatives can do. So my brother has $X per month that just magically appears and he does not report it at all. Since rent is not reported on dad’s side either, they are all good.
Your accountant really wishes you hadn’t put that in writing. 
Non-relatives can share household expenses just as much as relatives can. You mostly see this when no one is the owner, though, for obvious reasons.
If you scoop snow off of your neighbor’s sidewalk when he is out of town and he brings over a 6 pack to thank you when he gets home, that is technically also income and the value should be reported as such. How often do you think that happens? I’m guessing about as often as someone reporting income in the OP situation. I’m not advising not paying in either situation, but if one brother pays the other in cash I have no idea how anyone would ever think to question it, let alone prove it was income. Do with that info what you will.
^ Sort of. Unless it’s all truly in cash, nobody ever deposits anything or pays traceable bills with it… Otherwise, there will be a trail created.
And everybody has to make their own decisions, but I try to make choices not based on what might happen if I get caught, but as if my children were watching and I were teaching through my example. Teaching my children how to skim cash is not something I’d do.
But then again, I suspect I may be one of the only businesspeople in America that’s dumb enough to record all income and not run personal expenses through the business.
Have the one brother pay the utility bill or cable or something instead of rent.
What is the basis for determining the amount that the second sibling will pay in “rent?” Is arbitrary? Based on the going market rate for similar rentals? Or is it actually based on some estimate of the first sibling’s cost of owning and maintaining the home? If the latter, I would call that a sharing of expenses…
Some folks save the amount given by relatives and give it (or a portion) back to hen the person(s) is/are moving out so they will have moving money and money for security deposit, 1st & last month rent, etc.