Let's say I am letting out a room in my house on AirBnB for $100 per night. Then one day a relative of mine is down on his luck, so I take it off the market and instead let him stay in that room. I don't charge him anything. There is no formal agreement. The arrangement last for many months.

Is my gift of sleeping accommodation liable for gift tax? How is the value of it assessed?

How about if I let him use my car?

A key thing here is that what I am "giving" him cannot be resold. If I give him a house or a car he could then resell that, but if I let him stay in my house he can't sell that to someone else.

Is it different if he is not a relative? How is it different if he is my spouse?

References please.

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    Gifts under $15,000 annually are free, and even gifts over $15K "just" need to be deducted from the inheritance exclusion. No references, so no answer. – RonJohn Jan 24 at 18:37
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    Because I'm interested in the principle, not the details. What if the "market value" of my gift was more than $15,000? – DJClayworth Jan 24 at 18:43
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    This may actually be a dup (and it's kind of funny considering who answered it, possibly better there than here): money.stackexchange.com/q/88594/17718 – TTT Jan 24 at 20:38
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    @TTT looks duplicate to me... :) – RonJohn Jan 24 at 20:45
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    Does this answer your question? Gift taxes if I let my sister live rent free in a house I own? – RonJohn Jan 24 at 20:45

This article indicates that providing a below-market rent would, at most, convert the property from business use, which would allow for certain deductions/depreciation, to personal use, which would not.

I am not a lawyer/tax professional, but my sense from reading the IRS Gift Tax FAQs is that there is an assumption that gifts are money, property, or other tangible things of value. The whole point of the gift tax infrastructure seems to be to reduce estate tax avoidance. If you're not giving someone something they can spend or sell or get an income from (as in an interest in a business), I don't think it's a gift for these purposes; it's just a personal favor.

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  • That's a good link, but to my reading the FAQ would indicate that in-kind is a gift: "What is considered a gift? Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return." – DJClayworth Jan 24 at 20:47
  • @DJClayworth I think the keyword there is "transfer". The thing you're gifting has to have a value that the recipient can transfer to yet another person or entity. If I were an electrician, but did a little home rewiring for friend/relative, where they paid for the materials, I don't think the value of my time is considered a gift. If I paid for the materials and didn't get reimbursement, the value of the materials would be a gift (though not likely big enough to require paperwork, unless the wires were made of gold). – Rick Goldstein Jan 24 at 20:56

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