Timeline for What are the repercussions of letting your relatives live in your second house for free?
Current License: CC BY-SA 4.0
12 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Apr 23, 2023 at 6:09 | comment | added | littleadv | @Earth how? It's not deductible. You're proposing to increase the taxable income and then deduct it from the increase, ending up with the same result with some extra unnecessary steps | |
| Apr 23, 2023 at 1:31 | comment | added | Earth | @littleadv The point would be to pay building maintenance with pre-tax dollars. | |
| Apr 21, 2023 at 18:33 | comment | added | littleadv | @JTP-ApologisetoMonica no. Not getting money is not the same as giving money. You might say that functionally there's no difference, but legally - there is. There is only one case where the US tax law requires paying taxes on money not actually received - imputed interest on "free" loans. Since here there's no loan - there's no expectation of interest. There's no provision in the IRC for imputed rent. | |
| Apr 21, 2023 at 17:53 | comment | added | JTP - Apologise to Monica♦ | "In the US there's no "imputed" gift tax. So no, as long as you retain ownership and control you don't owe any taxes on the free rent." Isn't this the type of transfer of wealth the IRS looks at? If I buy a house and my child lives there rent free, doesn't that count against annual gifting limits, which I realize would never hit the lifetime limit given the current rules, but can easily pass the annual limit of $17K/yr. In this case, 4 people, $68K/yr still may be far above the value, but I think your first sentence may be wrong. No different than paying someone's rent. | |
| Apr 21, 2023 at 17:48 | comment | added | littleadv | @Earth but in your proposal you're also saying that the OP should gift that rent to their brother, so what's the point? They still spent all that same money, and they only added more paperwork to account for phantom income and expenses. Makes no sense. | |
| Apr 21, 2023 at 4:00 | comment | added | Earth | If you charge just enough rent to cover expenses, you could deduct maintenance costs without generating much taxable rental income. Minimizes your tax liability overall. | |
| Apr 20, 2023 at 17:37 | comment | added | littleadv | @R..GitHubSTOPHELPINGICE rental expenses can only be deducted from rental income, and related parties transactions only allow expenses to be deductible to the extent there's income. I.e.: you cannot have a deductible loss if you're charging below market rents. | |
| Apr 20, 2023 at 17:34 | comment | added | R.. GitHub STOP HELPING ICE | @keshlam: Does that let you treat the whole arrangement as a business loss to deduct maintenance expenses (or even depreciation of the property) from your taxes? | |
| Apr 20, 2023 at 0:05 | comment | added | keshlam | You could charge whatever rent you and your relative/tenant agree is reasonable. But you'd have to pay taxes on that rent as income, even if you wind up paying it to yourself. I don't see the advantage... | |
| Apr 19, 2023 at 23:07 | comment | added | littleadv | @Earth to what end? | |
| Apr 19, 2023 at 22:38 | comment | added | Earth | Could you maybe charge just enough rent to cover expenses, deduct those expenses from the rental income, and then gift your relatives cash roughly equivalent to that rent? | |
| Apr 19, 2023 at 17:34 | history | answered | littleadv | CC BY-SA 4.0 |