parental gifts and rent

Forum|Forum|2 years ago
June 5, 2023
1 reply
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Hello. I am in the process of purchasing a second home in my hometown, and I am going to let my recently widowed mother reside there rent free. We have very few reservations about this arrangement in light of our overall relationship. We do have one potential issue, though. My mom always had planned to share a little money with me over the rest of her life via substantial birthday and xmas gifts. Are we creating a situation where she can never give me significant sums b/c they will be viewed as rent?

PS - an idea I'm considering is having us enter an agreement making clear that mom can stay in the house until her death without ever paying rent, as that truly is our intent; it seems as if such an agreement might be relevant if future gifts were argued to be rent.

Critter-3

I don't know what your hesitation is ... you have a home that a family member will live in ... no rent is required. This is not reported on an income tax return even if they help to pay some of the holding costs or utilities.

Then if you get gifts from anyone in any amount this is not an income tax situation. If the giver gives more than $16K per year to any one person then the giver needs to file a gift tax return.