You don't have any rental activity to report. You can continue to deduct real estate taxes and mortgage interest, as per Schedule A (itemized deductions), for your second home. The Internal Revenue Service (IRS) allows you to take a mortgage interest deduction on a second home with immediate family members who live in it. The IRS defines immediate family members as siblings; half-siblings; ancestors, such as parents and grandparents; and linear descendants, as children and grandchildren.
If the family member pays rent, the mortgage interest deduction is allowed as long as their relative pays fair rent in the market. If you have a second home or rental property, it's tempting to rent it to a family member. After all, your relatives can be great tenants because you know them and are likely to take good care of the property.
