<p>Hi. My parents own two houses. Since my parents divorced this year, and my mother and I moved into one house, the only way my mom can pay the mortgage is by letting renting out a few rooms. Would this house be considered a rental property because of this?</p>
<p>The income from the rentals will be
considered income. To be honest, I’m not sure how the whole house would be viewed. It is your primary residence and you are renting rooms in it. I’m not sure it would be considered a “rental property”.</p>
<p>In terms of taxes, you can deduct expenses associated with the rented part. Not all that sure about the FAFSA.</p>
<p>This might help: [FinAid</a> | Professional Judgment | Rental Property and Multi-Family Residences](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid)</p>
<p>Yes, it is considered rental property, and the rental income needs to be reported on schedule E of her tax return. She can then deduct a portion of the expenses from the house (mortgage interest - not the whole payment, utilities, etc). If those expenses effectively wipe out the income, it will have very little impact on your FAFSA. As shown in sylvan’s link, if she is renting out rooms, but not apartments with a separate entrance & mailing address, it is considered part of your primary residence, so is not reported as an asset.</p>
<p>CTS…I just want to clarify…if the OP’s mom is simply renting bedrooms, her residence is NOT considered a rental property because it is her primary residence, BUT the rental income MUST be listed as income on the FAFSA. Is that what you mean?</p>
<p>Thumper, according to sylvan’s finaid.org link it’s not a rental property for assets:</p>
<p>"If the family rents out a room in their home, it is still considered part of the family’s primary residence, unless it has a separate mailing address (i.e., a separate outside entrance). </p>
<p>The key distinction is whether the rental property is considered part of the family’s primary residence or not. If it is part of the family’s primary residence, it is not reported as an asset." </p>
<p>As for income, the result from Schedule E goes on line 17 of the 1040 and thus the income from renting the rooms would be included in AGI. That’s how the income is included for FAFSA, not as a separate FAFSA line entry.</p>
<p>Sounds like we all agree. Home is not considered a rental property…but the rent is a reported income.</p>