Mom and Dad can rent out a room in their home or rent their entire house (tax-free) if they follow these three rules:
Rule 1: 14-Day Limit on Renting
Mom and Dad cannot rent their home for more than 14 days during the year.
Rule 2: More Than 14-Day Personal Use Requirement
To obtain any tax-free rent, Mom and Dad must personally use the place they rent to you for more than 14 days during the year.
Rule 3: Fair Market Rental Rate
When you stay with Mom and Dad, another family, or friends, you also need to pay a commercial rate, which the IRS refers to as a fair market rental rate.
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