I live in Washington state and my mother lives near my brother in California. I was considering purchasing a house with cash, for her to live in. The cost of the house would likely be around $600,000.
I understand if she lives there, without paying fair market rent, that’s considered a gift that I would have to report (assuming fair market rent exceeds 15,000/year).
I was wondering if that still applied if I gifted my mother a small percentage of the home ($15,000 or approximately 2.5% of the home) of the value; at the time it was purchased? Would that free her of responsibility of paying rent and free me of responsibility of reporting her rent-free living as a gift?
Update 2022-01: I no longer plan to gift my mother equity in the home, but do plan to gift my brother and his wife equity in the home (approximately 8%). Presumably, that would mean some of the fair market rental value would be sourced from them. In other words, if fair market value is $2500 per month… $2300 would be considered a gift from me and $200 would be considered a gift from my brother and his wife ($100 each)?
