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I have almost the exact same situation. I bought a house and the original owners stayed on for 60 days before I moved in to my new home. Except that I received a "rent back" credit at the time of settlement. It shows up in the settlement sheet as "rent back" , seller's expense. In effect I had to bring that much less money to the table. Do I have to report this on a schedule E as rental income and break out the interest and real estate taxes for the 60 days as an expense. Or can I just consider the "rent back" as an adjustment on the cost basis of the home purchase?

Thanks in advance
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