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I have a condo that I've been renting out to my mother-in-law for a couple of years. She only pays 2/3 of the typical rent in the area. I've been treating this as a rental, but it dawned on me recently that it doesn't really qualify (OK, so I'm slow :-) because it's not "fair rental price". Publication 527, the way I read it, says that I shouldn't include in income the money she pays me. Is this right?

I've been paying taxes on several $K per year and I'm wondering if:
1. I can really just ignore this much "profit"
2. I should file an amended return for previous years
3. I can still deduct property taxes for the property. I'm guessing the answer is NO for mortgage interest, since I also own two other houses. I haven't seen any restrictions on property taxes for a third house.

Any information would be appreciated.

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