Landloard to my Mother-in-law... wondering which way to file next year...as tennant or dependant?

[ukikkgr]

My wife and I bought a new house this spring to accomodate ourselves and my Mother in law who needs assisted care. The house is a former single family home turned into a legal two family about 10 years ago. Both sections have seperate utility bills, heat, however the previous owner knocked down the wall seperating the two 'units'. It's still a two family home on the books.

 

My mother-in-law is disabled and cannot walk. She requires daily nursing care and we moved her into our house instead of a nursing home. She contributes $500 toward our mortgage which we can legally constitute as rent as she lives in the second unit. My question is; would it be better to 'charge her rent and take the writeoffs and repairs on her living space or claim her as a dependant, accept her $500 contribution toward our mortgage. Or can I do both... claim her as a dependent and list her as a tennant. My wife and I are married with no children, and we file jointly. I estimate our gross income this year to be $142K and we'll pay about $13k in mortgage interest this year.

 

I know it's early, but we've made lots of repairs to her living space. About $4000 to date. Next week we're buying her a washer/dryer for her space. I'm wondering whether I'll be saving those recipits for writeoffs next year?