"Investment property" - - in-laws are renting!?

I have a single family investment property that is rented out to my in-laws. They pay the mortgage and ANY and ALL maintenance/upgrades to the house. (I essentially purchased it for them-they will buy from my in 2 years!) -- reminder - Currently it is my house, I'm on mortgage/deed, etc....

Issue - The mortgage payment is a direct withdrawal coming directly from their checking to bank. I do not pay out of my account. Also, maintenance and upgrades, utilities are all paid by them...Basically I used my income and credit to BUY them a house until they can get established.
FYI - they can afford the house no problem...
Question - Since I will be claiming mortgage and expenses, also reporting the rental income on Sch-E, if I were to get audited, will the IRS be looking for those receipts? The receipts I will have, as I've told them to keep all receipts for all purchases.

However, since all is paid by them and NO evidence of paid by me, would that be a problem for me?

Because of the fact that all the payments are in their name, they could deduct the interest paid on their taxes. As for the maintenance to the property, again, with all the receipts in their name, if you are ever audited, it will hard to explain that. If you are helping them out and it's only for a very short term, give the in-laws a break and let them write it all off, since it's really coming out of their pocket and not yours. That's only fair. If you are looking for any kind of return for the favor, usually what is done is there is either an agreed upon price that you will sell them the property at, with some profit or sell it to them at the appraised value at time of purchase. that's what is normally done to offset any benefits which they may be entitled to during the rental period.

if they ask u may need representation.
contact quailified CPA with real knowledge of tax issues.

You are handling the entire financial aspect of the rental property badly.....everything should go through an account specific to the cash flow of that property....

You need to have all payments pertaining to the rental go thru your account.....most tenants pay their own utilities.

In the event you get audited, you could be dinged badly for having NO paper trail of the rental......you should always have a loss on a rental on paper......and must have the trail to back it up....

And as tenants....they aren't allowed to deduct anything pertaining to the rental.

I was once in your situation. Don't worry, everything will work out for you =)

A year ago I found this organization that gives people up to $1500 in renter or mortagage assistance! They operate in most US cities, I highly suggest you try to get some of this money.


http://www.help-my-house-mortgage-rent.o...

Good Luck!