I have a second home in SC near the beach. Since we don't use it like one week a year now, it is a negative cash burden. Two of my kids would rather I start renting it out.
My idea would be to lease the home to my kids for like $ 1 dollar a year and they in turn would then contact a management agentcy to rent it out. So that it would help them out and take the burden off me. Upon my passing they would become owners of the property.

The difference between the market value of the property and what you charge your kids is considered a gift from you to them. If that value exceeds the annual gift tax exclusion limnit of $15K each ($30K total) then you will have to file a gift tax return. You most likely won't owe any gift tax, but it may have an effect on your estate planning.

If I were you I would charge more than $1 - after all as the owner you are still responsibile for paying real estate taxes and insurance, and only you are allowed to take depreceiation on the property. I suggest you charge your kids enough to cover those expenses, and they can keep whatever above that they get in rent. You must also document all this in a contract, including who pays for utilities, maintenence and repairs.

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Originally Posted by ebaines

The difference between the market value of the property and what you charge your kids is considered a gift from you to them. If that value exceeds the annual gift tax exclusion limnit of $15K each ($30K total) then you will have to file a gift tax return. You most likely won't owe any gift tax, but it may have an effect on your estate planning.

If I were you I would charge more than $1 - after all as the owner you are still responsibile for paying real estate taxes and insurance, and only you are allowed to take depreceiation on the property. I suggest you charge your kids enough to cover those expenses, and they can keep whatever above that they get in rent. You must also document all this in a contract, including who pays for utilities, maintenence and repairs.

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You are right, I was thinking of some arrangement like you say above. Would not generate enough to trigger a tax problem for them and would ease my problems.

You would not believe the problems I am having typing this response. Phantoml
ine feeds, the cursor jumping into the message already typed, messages popping up "asking do I want to stay on this page" ( pingStarts tyetc ) like this. Very annoying

If you're having technical issues with this site I suggest clearing your browser's cache, and if that doesn't help then post a question about it in the Forum Help section. Be sure to indicate what browser and version you are using.

And one correction to my earlier response: the annual gift tax exclusion is $14K per person, not $15K.

I think I have figured out what the trouble I have been having on here. Not 100% sure because I restored my computer to an earlier time, thinking that might be a good way to fix the problem.

In addition, I found that the heel of my palm was hitting the mouse pad on my laptop and this appears to be the Phantom crazyness plaguing my posts and emails.