Girlfriend paying rent

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ohboy!
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Girlfriend paying rent

Post by ohboy! »

Curious how other people might think best to handle this scenario. I have been with my GF for over 3 years. The past 2 years she has stayed at my place 90% of the time. I own a small house in Southern California which cost me $600k in 2018. Having sold some investment properties I don’t owe much on the house but the monthly payment is $2200 with $650 or so being property taxes. My GF was renting a room for $550 but that’s a deal from probably 6 years ago. Prices in my area are more like $750 now with a shared bathroom. Anyways, we have agreed she will move in and pay me $750 a month. Just the two of us in the house. She actually makes quite a bit more than me but has student loans. Even with the loans she could afford $2k a month. I figure that’s probably about half of the real cost of my house ($4k a month total). But she isn’t buying in, she is just trying to help with costs. I kind of figure taxes, insurance, utilities, and maintenance is up around $1500. I think we are settled on the deal. Though I keep asking myself if it’s fair. One thing I haven’t figured out is if Ill have to claim her rent on my taxes. Any experience from Bogleheads on moving in and collecting “rent” from a SO?
oldfort
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Re: Girlfriend paying rent

Post by oldfort »

Legal answer - Rent is income and the fact you are sleeping with your tenant is irrelevant in the eyes of the IRS.

Real World answer - I would be very surprised if many people reported this on their 1040.
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anon_investor
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Re: Girlfriend paying rent

Post by anon_investor »

ohboy! wrote: Sat Jun 06, 2020 3:38 pm Curious how other people might think best to handle this scenario. I have been with my GF for over 3 years. The past 2 years she has stayed at my place 90% of the time. I own a small house in Southern California which cost me $600k in 2018. Having sold some investment properties I don’t owe much on the house but the monthly payment is $2200 with $650 or so being property taxes. My GF was renting a room for $550 but that’s a deal from probably 6 years ago. Prices in my area are more like $750 now with a shared bathroom. Anyways, we have agreed she will move in and pay me $750 a month. Just the two of us in the house. She actually makes quite a bit more than me but has student loans. Even with the loans she could afford $2k a month. I figure that’s probably about half of the real cost of my house ($4k a month total). But she isn’t buying in, she is just trying to help with costs. I kind of figure taxes, insurance, utilities, and maintenance is up around $1500. I think we are settled on the deal. Though I keep asking myself if it’s fair. One thing I haven’t figured out is if Ill have to claim her rent on my taxes. Any experience from Bogleheads on moving in and collecting “rent” from a SO?
Haha that's cold! When my then SO (and now spouse) moved in with me, instead of charging rent my SO paid for internet, cable, utilities, groceries and gas. It just seemed more fair and equitable (also felt that it would be less messy if things did not workout)... but that is just me...
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greg24
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Re: Girlfriend paying rent

Post by greg24 »

If she would normally be paying roughly $750 in rent elsewhere, then charging her $750 rent seems fair.
stan1
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Re: Girlfriend paying rent

Post by stan1 »

Renting is a business. Living with and sharing expenses with your GF is not a business. You can share expenses without charging her rent. The IRS does not say you have to start a business when your GF moves in.

Putting an ad online for a girlfriend is not a business. Putting an ad online to rent out spare rooms starts to look like a business.

What you can't do is say you are sharing expenses for purposes of income (not reporting income) and then try to write off rental business expenses (like repairs or depreciation). That's what the IRS is most concerned about.
Last edited by stan1 on Sat Jun 06, 2020 3:53 pm, edited 2 times in total.
sailaway
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Re: Girlfriend paying rent

Post by sailaway »

My SO's mom had some convoluted, if you pay rent, you might expect equity and that wouldn't be fair to me.

So we agreed he would cover:
-car insurance (he was still a young man, so putting him on my insurance as a domestic partner was cheaper than anything he could find on his own. We both saved money!)
-groceries
-a gift of $5k, meant for my Roth IRA (hey, it's been awhile)

As I recall, as part of groceries, he also paid whenever we went out together, but it has been a long time, so not sure about that.

In reality, things started shifting within the first two years, although we didn't have any actual joint accounts until about 8 years in.
oldfort
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Re: Girlfriend paying rent

Post by oldfort »

stan1 wrote: Sat Jun 06, 2020 3:51 pm Renting is a business. Living with and sharing expenses with your GF is not a business. You can share expenses without charging her rent. The IRS does not say you have to start a business when your GF moves in.

Putting an ad online for a girlfriend is not a business. Putting an ad online to rent out spare rooms starts to look like a business.

What you can't do is say you are sharing expenses for purposes of income (not reporting income) and then try to write off rental business expenses (like repairs or depreciation). That's what the IRS is most concerned about.
They aren’t sharing expenses with respect to the mortgage unless the GF is listed on the property title.
Last edited by oldfort on Sat Jun 06, 2020 4:12 pm, edited 1 time in total.
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CAsage
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Re: Girlfriend paying rent

Post by CAsage »

Since GF is not enjoying any of the appreciation on the house, it makes perfect sense for her to pay 1/2 of the nominal recurring costs of the house - property taxes, insurance, utilities etc. I would truly hesitate to charge her any more than $750 just because she can afford it, because she is not getting any of the capital gain. Long term plan on that might be worth discussing....
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BruinBones
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Re: Girlfriend paying rent

Post by BruinBones »

“When my then SO (and now spouse) moved in with me, instead of charging rent my SO paid for internet, cable, utilities, groceries and gas. It just seemed more fair and equitable (also felt that it would be less messy if things did not workout)...”

+1.
Do you want to be a good landlord or a good boyfriend?
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tesuzuki2002
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Re: Girlfriend paying rent

Post by tesuzuki2002 »

anon_investor wrote: Sat Jun 06, 2020 3:42 pm
Haha that's cold! When my then SO (and now spouse) moved in with me, instead of charging rent my SO paid for internet, cable, utilities, groceries and gas. It just seemed more fair and equitable (also felt that it would be less messy if things did not workout)... but that is just me...
Go this route. She can pay the utilities, cable, groceries and such... should work out... and you are not actually collecting rental income at that point so it is a little bit cleaner... should at any point the IRS has any involvement with you.
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Sandtrap
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Re: Girlfriend paying rent

Post by Sandtrap »

Rent/Expense Classifications:

Girlfriend/Boyfriend/SO:
50% if also a room mate renting an apartment together with no future as a spouse
0% if a guest with no future as a spouse, casual dating, and subject to eviction with breakup

0% if Girlfriend/Boyfriend/SO is a fiancé
50% or other % according to means and willingness to take risk

0% or whatever she wants, if Girlfriend becomes your spouse/DW

Questions:
1. Does girlfriend expect to be supported?
2. Does girlfriend expect to not pay rent?
3. What happens to girlfriend's former residence?
4. Will the rent that was paid for the former girlfriend's residence now to go another rent or student loans or. . . . .

(This reminds me of a TV Sitcom episode of "New Girl")

Sharing Expenses sounds a lot better than paying rent.
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HomeStretch
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Re: Girlfriend paying rent

Post by HomeStretch »

If $750 is market to rent a room, it seems fair for the rent. Plus sharing utilities/internet, food costs.

For $2,000, I’d buy my own place rather than paying that as rent to share SO’s house.
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Kenkat
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Re: Girlfriend paying rent

Post by Kenkat »

ohboy! wrote: Sat Jun 06, 2020 3:38 pm I think we are settled on the deal.
This is all that matters. Leave it be.
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anon_investor
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Re: Girlfriend paying rent

Post by anon_investor »

Kenkat wrote: Sat Jun 06, 2020 4:27 pm
ohboy! wrote: Sat Jun 06, 2020 3:38 pm I think we are settled on the deal.
This is all that matters. Leave it be.
The lawyer in me wants to know what contingencies are in place if she fails to pay rent on time or they break up...
stan1
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Re: Girlfriend paying rent

Post by stan1 »

anon_investor wrote: Sat Jun 06, 2020 4:31 pm
Kenkat wrote: Sat Jun 06, 2020 4:27 pm
ohboy! wrote: Sat Jun 06, 2020 3:38 pm I think we are settled on the deal.
This is all that matters. Leave it be.
The lawyer in me wants to know what contingencies are in place if she fails to pay rent on time or they break up...
Well at least California does not recognize common law marriages so there's that.
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Nate79
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Re: Girlfriend paying rent

Post by Nate79 »

You sound like a good roommate. Your roommate is paying rent to you as the owner of the home unless she pays for other costs directly. You are not just splitting rent.
halfnine
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Re: Girlfriend paying rent

Post by halfnine »

CAsage wrote: Sat Jun 06, 2020 3:56 pm Since GF is not enjoying any of the appreciation on the house, it makes perfect sense for her to pay 1/2 of the nominal recurring costs of the house - property taxes, insurance, utilities etc. I would truly hesitate to charge her any more than $750 just because she can afford it, because she is not getting any of the capital gain. Long term plan on that might be worth discussing....
This. Your GF is missing out on the opportunity cost of having a home and additionaly the benefit of having it subsidized by a roommate.

When I moved in with my SO they originally wanted to charge me market rates. At which point, fair being fair, I offered to buy the place off them and charge them market rates. They, obviously, weren't so fond of that idea and so we settled on a more reasonable arrangement.
Balefire
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Re: Girlfriend paying rent

Post by Balefire »

I moved in with my GF many years ago no questions asked. No rent or dues expected of me. It was the financially better move and her place was better than mine.

Several months later all the rent and util money I saved went to the ring. Of course we are married now.

Have things changed that we charge our SO?
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anon_investor
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Re: Girlfriend paying rent

Post by anon_investor »

stan1 wrote: Sat Jun 06, 2020 4:33 pm
anon_investor wrote: Sat Jun 06, 2020 4:31 pm
Kenkat wrote: Sat Jun 06, 2020 4:27 pm
ohboy! wrote: Sat Jun 06, 2020 3:38 pm I think we are settled on the deal.
This is all that matters. Leave it be.
The lawyer in me wants to know what contingencies are in place if she fails to pay rent on time or they break up...
Well at least California does not recognize common law marriages so there's that.
If she fails to timely pay rent, can't really evict a current gf. If the now ex gf pays rent on time, can't really evict her. Just sounds like trouble...
bayview
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Re: Girlfriend paying rent

Post by bayview »

Token rent or taking over expenses in order that she can throw every other penny at her student loans.

When they’re paid off she’s *somehow* (waving hands in air) on a more equal basis with you. By then you two might have some idea of whether the future is marriage, long-term partnership, or this open-ended thing. Maybe revisit then.

But this should be the opportunity for her to kill off her debt.
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scubadiver
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Re: Girlfriend paying rent

Post by scubadiver »

I think you have reached a reasonable agreement for sharing expenses with your girlfriend.

I also don't think you need to report this to the IRS. It's your girlfriend, you're in a long-term relationship and you're sharing reasonable expenses. End of story.
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whodidntante
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Re: Girlfriend paying rent

Post by whodidntante »

I would come up with some other cost sharing agreement. Like she pays all utilities, groceries, or whatever might get to a reasonable cost sharing plan. Of course, you'll first need to know what you're spending.
Bfwolf
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Re: Girlfriend paying rent

Post by Bfwolf »

I am stunned that a house that was worth ~$600K in 2018 (so now more surely) only rents for $1,500 (her $750 being fair market value for half). Are Bay Area SoCal home prices that insane? A 33X+ annual rent multipler?
Last edited by Bfwolf on Sat Jun 06, 2020 7:12 pm, edited 1 time in total.
mouses
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Re: Girlfriend paying rent

Post by mouses »

HomeStretch wrote: Sat Jun 06, 2020 4:17 pm If $750 is market to rent a room, it seems fair for the rent. Plus sharing utilities/internet, food costs.

For $2,000, I’d buy my own place rather than paying that as rent to share SO’s house.
If she can rent elsewhere for $750, charge her $750 plus utilities if rent elsewhere would require that. No sane girlfriend would pay half the monthly cost of the house unless she were getting equity. I am surprised the OP even thought of charging her that much.

This kind of creeps me out. If I were the girlfriend, I would keep my own apartment.
mouses
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Re: Girlfriend paying rent

Post by mouses »

Bfwolf wrote: Sat Jun 06, 2020 5:08 pm I am stunned that a house that was worth ~$600K in 2018 (so now more surely) only rents for $1,500 (her $750 being fair market value for half). Are Bay Area home prices that insane? A 33X+ annual rent multipler?
I don't know about current bay area rents, but when I lived there a couple of decades ago, my
two bedroom one bath 100 year old bungalow sold for about 1 mil.
yosemite_mountain
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Re: Girlfriend paying rent

Post by yosemite_mountain »

Delete
Last edited by yosemite_mountain on Sat Jun 06, 2020 7:36 pm, edited 1 time in total.
oldfort
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Re: Girlfriend paying rent

Post by oldfort »

scubadiver wrote: Sat Jun 06, 2020 4:58 pm I think you have reached a reasonable agreement for sharing expenses with your girlfriend.

I also don't think you need to report this to the IRS. It's your girlfriend, you're in a long-term relationship and you're sharing reasonable expenses. End of story.
Paying rent to the owner of the property is not sharing expenses when he is the sole owner. There's nothing in the IRS pubs which create an exception for girlfriends or those in long term relationships. If they weren't dating, and he had a roommate, could anyone claim the rent didn't qualify as income?
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windaar
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Re: Girlfriend paying rent

Post by windaar »

I would not want a girlfriend as a tenant in my house. Depending on where you live she could invoke all kinds of rights if you break up, like refusing to leave and having her new boyfriend move in with her. How does that sound?
Nobody knows nothing.
softwaregeek
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Re: Girlfriend paying rent

Post by softwaregeek »

windaar wrote: Sat Jun 06, 2020 5:30 pm I would not want a girlfriend as a tenant in my house. Depending on where you live she could invoke all kinds of rights if you break up, like refusing to leave and having her new boyfriend move in with her. How does that sound?
Only if there is a written lease.
montanagirl
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Re: Girlfriend paying rent

Post by montanagirl »

OP needs to Google "IRS not for profit rental."
JackoC
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Re: Girlfriend paying rent

Post by JackoC »

anon_investor wrote: Sat Jun 06, 2020 4:50 pm
If she fails to timely pay rent, can't really evict a current gf. If the now ex gf pays rent on time, can't really evict her. Just sounds like trouble...
In a lot of places you'll also have trouble 'evicting' an ex-SO who isn't paying. The way you make it kosher not to report the $750 as rental income is for it to be just a splitting of expenses by the two people who live there. Where $750 seems legit based on OP's statement 'she is just trying to help with costs. I kind of figure taxes, insurance, utilities, and maintenance is up around $1500'. OTOH if it's not a lease with rent, it's just two people who live there and in most jurisdictions that doesn't give the person whose name is on the deed the right to kick the other one out quickly and easily. Once the person has established themselves as 'resident' in that situation it can be a heck of time getting them kicked out, much harder than kicking out a non-paying tenant on a formal lease (though that itself is a prolonged nightmare for property owners in some places).

Not to be a downer about true love. :happy Anyway if you try to avoid the loss of control of the property problem by making it formal lease, *then* you'd have a potential problem not reporting the money as income. As long as it's roommates sharing expenses it's not taxable, even if one of the roommates owns 100% of the property. But again, inviting somebody to live with you *without* a lease is where you can run into even more trouble kicking them out if things sour than if you made them sign a lease.
Last edited by JackoC on Sat Jun 06, 2020 5:54 pm, edited 1 time in total.
sailaway
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Re: Girlfriend paying rent

Post by sailaway »

Is renting less than 14 days a year the only exception to reporting rent as income?
JackoC
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Re: Girlfriend paying rent

Post by JackoC »

sailaway wrote: Sat Jun 06, 2020 5:54 pm Is renting less than 14 days a year the only exception to reporting rent as income?
This is like a lot of tax discussions here, gift tax is the most common one. Lots of responses 'the IRS clearly says gifts are subject to gift tax'. But they don't say as clearly what *is* a gift, and that's usually the actual question. Same here. If it's rent it's taxable, with no exception that would be relevant here. The question is whether it's rent. If the SO pays $750, that's 1/2 the recurring expenses (as OP says), then that can be called splitting expenses, not paying rent, not taxable. If OP were to create a paper trail calling it 'rent' (well, sort of has on this thread :happy ) then there could conceivably (albeit practically highly unlikely) be a dispute with the IRS at some point.
illumination
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Re: Girlfriend paying rent

Post by illumination »

I think you are "falling on your sword" too much, especially considering she makes significantly more than you do. Something like $550 a month for her previous place in So Cal is a joke, that sounds like some sort of insider deal. She should really be closer to $2000 month "all in" from what you're describing.

I get that a relationship is not a business deal, but if the person living with you is making more than you do, they should be willing to pay their fair share. I also don't think it's fair to somehow charge less because you're potentially using it towards a mortgage. So if she pays less rent and puts more towards her own 401k, how does that dynamic work? When I have paid rent, what the homeowner does with that rent is pretty immaterial. I'm not saying you chase after every penny, but I think you can present to her what it costs to live in that house and she should be willing to come closer to 50/50.
sd323232
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Re: Girlfriend paying rent

Post by sd323232 »

ohboy! wrote: Sat Jun 06, 2020 3:38 pm Curious how other people might think best to handle this scenario. I have been with my GF for over 3 years. The past 2 years she has stayed at my place 90% of the time. I own a small house in Southern California which cost me $600k in 2018. Having sold some investment properties I don’t owe much on the house but the monthly payment is $2200 with $650 or so being property taxes. My GF was renting a room for $550 but that’s a deal from probably 6 years ago. Prices in my area are more like $750 now with a shared bathroom. Anyways, we have agreed she will move in and pay me $750 a month. Just the two of us in the house. She actually makes quite a bit more than me but has student loans. Even with the loans she could afford $2k a month. I figure that’s probably about half of the real cost of my house ($4k a month total). But she isn’t buying in, she is just trying to help with costs. I kind of figure taxes, insurance, utilities, and maintenance is up around $1500. I think we are settled on the deal. Though I keep asking myself if it’s fair. One thing I haven’t figured out is if Ill have to claim her rent on my taxes. Any experience from Bogleheads on moving in and collecting “rent” from a SO?
Everything should be 50/50.
sd323232
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Re: Girlfriend paying rent

Post by sd323232 »

yosemite_mountain wrote: Sat Jun 06, 2020 5:15 pm
ohboy! wrote: Sat Jun 06, 2020 3:38 pm Even with the loans she could afford $2k a month. I figure that’s probably about half of the real cost of my house ($4k a month total).
Are you kidding me? Why are you so stingy that you want her to pay $2k yet she doesnt have part ownership. If I were your girlfriend I'd dump you unless I were desperate.
I am not sure why you are insulting OP. He has a valid financial question and came here for an answer, not to be put and looked down on.
sailaway
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Re: Girlfriend paying rent

Post by sailaway »

I disagree that it should be 50/50.

If at all possible, it should be "everyone is better off than they were before." Or, at least, better off than they would be otherwise. In this case, it sounds like 50/50 would be penalizing GF financially, while benefitting OP. That is a funky definition of "fair."

If OP were kicking out a roommate, that would be a very different calculation.
tibbitts
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Re: Girlfriend paying rent

Post by tibbitts »

illumination wrote: Sat Jun 06, 2020 6:38 pm I think you are "falling on your sword" too much, especially considering she makes significantly more than you do. Something like $550 a month for her previous place in So Cal is a joke, that sounds like some sort of insider deal. She should really be closer to $2000 month "all in" from what you're describing.

I get that a relationship is not a business deal, but if the person living with you is making more than you do, they should be willing to pay their fair share. I also don't think it's fair to somehow charge less because you're potentially using it towards a mortgage. So if she pays less rent and puts more towards her own 401k, how does that dynamic work? When I have paid rent, what the homeowner does with that rent is pretty immaterial. I'm not saying you chase after every penny, but I think you can present to her what it costs to live in that house and she should be willing to come closer to 50/50.
Cost of living in it, yes, but OP seems to be saying market rent is about $750. Why should she pay $2000 without any ownership participation?
yohac
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Re: Girlfriend paying rent

Post by yohac »

ohboy! wrote: Sat Jun 06, 2020 3:38 pm Anyways, we have agreed she will move in and pay me $750 a month.
Then I would stick to the agreement, unless something material has changed since making it.
Bfwolf
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Re: Girlfriend paying rent

Post by Bfwolf »

If you can really rent the equivalent of your house for $1,500 a month, then my suggestion is sell your house and do that, and split the rental cost with the gf. Your house is way over-valued at $600K+ if it's only worth $1,500 a month in rent.
TheNightsToCome
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Re: Girlfriend paying rent

Post by TheNightsToCome »

My girlfriend and I were together for 9 years before we married. When she lived in my house I didn't ask her to pay for anything, but she wanted to pay for things so she tended to do most of the grocery shopping. She's a great chef and she took care of all the cooking, too.

When we moved for my job I didn't want her to have to work any more, and she's happy to be "retired."

I wouldn't want to mix finances with romance. If you are in a loving relationship with a good person who has some means, she will probably volunteer to contribute, but if not, I wouldn't seek to negotiate a deal; it's not a business relationship.

Just my take.
HomeStretch
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Re: Girlfriend paying rent

Post by HomeStretch »

If you do decide to renegotiate the previously agreed upon $750, consider doing so before your GF gives up her apartment. She might not be willing to move if her rent goes from $550 to more than $750. It could be that she purposely chose to live below her means in her current low-rent apartment to have more free cash to pay off her loans or to build her retirement savings.
Boglegirl81
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Re: Girlfriend paying rent

Post by Boglegirl81 »

halfnine wrote: Sat Jun 06, 2020 4:40 pm
CAsage wrote: Sat Jun 06, 2020 3:56 pm Since GF is not enjoying any of the appreciation on the house, it makes perfect sense for her to pay 1/2 of the nominal recurring costs of the house - property taxes, insurance, utilities etc. I would truly hesitate to charge her any more than $750 just because she can afford it, because she is not getting any of the capital gain. Long term plan on that might be worth discussing....
This. Your GF is missing out on the opportunity cost of having a home and additionaly the benefit of having it subsidized by a roommate.

When I moved in with my SO they originally wanted to charge me market rates. At which point, fair being fair, I offered to buy the place off them and charge them market rates. They, obviously, weren't so fond of that idea and so we settled on a more reasonable arrangement.
I can see this point, but I’m selling my house to move in with my boyfriend. He makes more than I do, and I’m looking at a covid-related lay-off, so I won’t have to pay any of the house expenses. However, I was way in over my head for the 2 years I have owned my single family home (which is under contract now) and I’d gladly pay him close to market rate in “rent” if I had to just to be a tenant again. I found home ownership to be an expensive hassle, but I guess I’m in the minority because there was no shortage of people wanting to buy my house. My house is closing in a few days and I’m quite looking forward to being a “tenant” again.
UpperNwGuy
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Re: Girlfriend paying rent

Post by UpperNwGuy »

halfnine wrote: Sat Jun 06, 2020 4:40 pm When I moved in with my SO they originally wanted to charge me market rates. At which point, fair being fair, I offered to buy the place off them and charge them market rates. They, obviously, weren't so fond of that idea and so we settled on a more reasonable arrangement.
^^^ I like this story.
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Watty
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Re: Girlfriend paying rent

Post by Watty »

Whatever you decide you should make sure that both your house and car insurance companies are OK with your arrangements. You don't what to have something happens like she borrows your car or slips in your shower and you find out that you are not covered by insurance because of how you set up your arrangements.

If this is going to be a long term cohabitation situation then you should consider getting lawyers to draw up appropriate agreements to formalize how the situation will work.
scubadiver
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Re: Girlfriend paying rent

Post by scubadiver »

oldfort wrote: Sat Jun 06, 2020 5:17 pm
scubadiver wrote: Sat Jun 06, 2020 4:58 pm I think you have reached a reasonable agreement for sharing expenses with your girlfriend.

I also don't think you need to report this to the IRS. It's your girlfriend, you're in a long-term relationship and you're sharing reasonable expenses. End of story.
Paying rent to the owner of the property is not sharing expenses when he is the sole owner. There's nothing in the IRS pubs which create an exception for girlfriends or those in long term relationships. If they weren't dating, and he had a roommate, could anyone claim the rent didn't qualify as income?
It's not rent. She's contributing her share to household expenses. There is no lease, reaffirming that it is not rent. Sharing expenses in this manner is a perfectly reasonable arrangement for a non-marital but cohabitating couple.
mortfree
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Re: Girlfriend paying rent

Post by mortfree »

Let her pay the monthly utilities- electric, cable, etc.

You pay mortgage, property taxes.

This is what we did prior to marriage.

It’s not called rent.
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celia
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Re: Girlfriend paying rent

Post by celia »

California has a state renters tax credit when you file income taxes. The renter needs to give out the address, landlord's name and amount of rent that was paid to get the tax credit. Is she willing to forgo claiming it? If not, you will have to claim the same amount as rent on your own return.

To avoid this complication, it is better if she pays for food and utilities instead of rent.
sailaway
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Re: Girlfriend paying rent

Post by sailaway »

celia wrote: Sat Jun 06, 2020 9:24 pm California has a state renters tax credit when you file income taxes. The renter needs to give out the address, landlord's name and amount of rent that was paid to get the tax credit. Is she willing to forgo claiming it? If not, you will have to claim the same amount as rent on your own return.

To avoid this complication, it is better if she pays for food and utilities instead of rent.
Unless he expects her to pay half her AGI in rent (claims she could afford $2k), she isn't eligible for this.
JackoC
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Re: Girlfriend paying rent

Post by JackoC »

Bfwolf wrote: Sat Jun 06, 2020 7:15 pm If you can really rent the equivalent of your house for $1,500 a month, then my suggestion is sell your house and do that, and split the rental cost with the gf. Your house is way over-valued at $600K+ if it's only worth $1,500 a month in rent.
Houses in very high cost areas can be priced at very high rent multiples. OP believes the multiple is 33 times for his house. Condo's in our city (NJ right next to NY) sell at around ~19 times rent, based on real rents and a good idea of actual value. Zillow says our house has a multiple around 70. They are not far off on the market value. You could argue they must be way low on rent, but thing is, there is no real market to *rent* houses like ours. The sale market is the only real one. And even if we could get double what Zillow says, still a very high multiple. There are some peculiarities involved here that might not apply in OP's case (these are ~120-140 yr old houses, renters generally want hassle free new construction big condo for a comparable size, however there is demonstrably strong demand to buy, further upgrade and modernize and live in these old houses). But the general point is that just because my house would be a terrible income property doesn't mean I should necessarily want to sell it.

Anyway, key to OP's situation is not to call this arrangement rent and cause a tax problem. It's sharing expenses. And if the recurring expenses are $1.5k/mo, $750 is about right for a housemate with no ownership.
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