Rent in exchange for work on the house

[AZ Manager]

Originally Posted by Electrician4you

You may be nice people but I don’t see ANY benefit to the LL to have this type of arrangement. He just lost a years worth of income and I highly doubt you guys did a remodel where it all equaled out fairly. Not to mention you guys are contracting without a license, or the liability for f you get hurt since he’s technicall6 your employer now. He paid for all the materials, utilities and had no income from the rental for the year because you guys lived there free? Not only is there absolutely NO income from the rental, there are no deductions as there is no income from the “rental”. How do you deduct the remodel over a year with no income to show for the rental.
Hell he would be better off doing a HELOC to remodel and charge rent. At least he would have income and deductions at that point.

You can still get the deductions you just wind up with a suspended loss and you carry that forward and get the write off every year until it is gone. Have you never had paper losses that you carried forward?

[fluffythewondercat]

You gotta love the 1 post wonders in this thread who are hoping someone is dumb enough to let people without references or licensing live in their house, based on a promise.

Our own tenants stopped paying rent and asked for the chance to live in our rental for one year "free" while they remodeled the place. Riiiiight. This scam must be popular on the Internet or something.

[Electrician4you]

Originally Posted by AZ Manager

You can still get the deductions you just wind up with a suspended loss and you carry that forward and get the write off every year until it is gone. Have you never had paper losses that you carried forward?

When I had units down for a renovation but it wasn’t actively rented. It was vacant. I deducted the costs of the remodels. But that was about the only similar situation as this with a remodel/ big repairs

I had repairs while tenants lived in the property like replaced carpet, redo a bathroom but not the live/work arrangement that the op is describing, I don’t do the rent in exchange for construction work deals. I’ve done lowered rent because the tenant said they can fix xyz but usually ended up to be a crap repair so that stopped.

I would have no interest in doing such arangement. You pay me the rent you owe me and I’ll take care of repairs on my properties.

Regardless, labor in exchange for rent is still considered income and must be declared. At least that’s the way I understood it. Even though it’s a exchange the labor has a monetary
value.

There is no way the IRS is gonna buy that you had no income on a property but you have deductions.

[Rabrrita]

In most buildings, we have a Resident Property Manager and a Resident Superintendent. Both receive pay plus an apartment. In both cases, they have an actual lease that also spells out their unique living arrangements with their units. Just like a tenant, the terms of the lease is legally binding so there is no confusion over occupancy. Should their employment end, the lease spells out what happens as far as their occupancy of the unit. Even if we hire the Super or RPM to do extra work outside their normal employment, they get paid for their work and we don't futz with the lease.

[LifeIsGood01]

Never let someone live in your house rent free in exchange for repairs. It's been discussed in other threads, but you will eventually have to evict them if they don't feel like doing the work and you can't even try to collect any back rent. If you even think of doing such a thing, collect rent and pay him back what he paid after you see the work is done.