Fair Rental Value


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Fair Rental Value

The amount the owner of property could reasonably expect to receive from a stranger for the same type of lodging; generally, the amount at which a home with its furnishings could be rented to a similar size family in a similar location.
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During the current tax year, they lease a warehouse to the corporation at a fair rental value of $2,000 per month.
Any lease renewals also must be set at fair rental value.
31, 2001, the excludable rental allowance is limited to the fair rental value of the home (including any furnishings and garages) plus the cost of utilities.
In the event that one cotenant wrongfully excludes another from access, then the excluded tenant may be entitled to the fair rental value of his or her ownership interest in the property as a result of an ouster.
A minister who lives in a church-owned parsonage may exclude the fair rental value of the property from income for federal taxes.
* Is there a cost for a fair rental value analysis?
The Court has stated that "[o]rdinarily, a leasehold interest has a compensable value whenever the capitalized then fair rental value for the remaining term of the lease, plus the value of any renewal right, exceeds the capitalized value of the rental the lease specifies." [17] Or, as the Court expressed the concept in another case:
If a cleric rents or owns a home, he or she should negotiate with the employer to set the allowance at an amount equal to the fair rental value of the home, plus the cost of the utilities.
Ideally, the donor and the new owner should execute a rental agreement before the initial trust term expires and obtain an appraisal or realtor opinion that sets forth the fair rental value in the agreement.
[section] 61.077 uses the words "credits" and "setoffs," but it cannot be relied upon as authority to set off 50 percent of the fair rental value for a period of exclusive possession as against 50 percent of a cotenant's payment of reimbursable household expenses of the marital home during the primary residential parent's exclusive occupancy with the minor children.
IRC section 107, as amended by The Clergy Housing Allowance Clarification Act of 2002, states that "in the case of ministers ..., gross income does not include the rental allowance paid to him as part of compensation to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities." The housing allowance must actually be used to maintain or provide a furnished home and cannot be used for other purposes.
The amount you pay is no more than the fair rental value. You have not made a deductible charitable contribution.