I bought a second home which I rent to my disabled brother. Taxes= rental or a second home?

It depends on whether it is a bona fide rental, ie are you treating it like you would if a stranger rented it from you. Are you charging fair rental value, taking a security deposit, written contract, etc?

If yes then you have a rental. Report it on Sch E and you can take depreciation and other cash costs. i would, however, have him write the checks to you and you pay the mortgage yourself.

If no, it is a second homw. Report the income on 1040 line 21 and deduct the Mort interesrt and prop tax on Sch A. No depreciation or other cash exps.

RE: renting below fair rental value to get a tax break is stupid for 2 reasons. FIrst you are sacrificing a dollar to save a quarter. DUH! More importantly, unless you have a bona fide business reason to do any action, if your main motive is to reduce your tax it is not a bona fide deuction and IRS will disallow it.

Uncle Sam will not subsidize tax evasion schemes. They will allow (generally) bona fide expenses incuirred in the producion of income.

DO NOT READ THAT LAST STATEMENT AS A LICENSE TO SPEND MONEY JUST TO GET A TAX DEDUCTION. There are too many exceptions to this to get into here.

If you are not living in it for even part of the year, it would be considered a rental and the rent monies received would be taxable. The good news is that if you have a mortgage on it, you're paying interest on it and that is deductable.

It is rental income. File a Schedule E to get your net rental income after deductions