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catonsville · Apr 23, 2014, 06:25 PM

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.

ebaines · Apr 24, 2014, 05:48 AM

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.

catonsville · Apr 24, 2014, 03:30 PM

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.

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

ebaines · Apr 25, 2014, 05:39 AM

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.

catonsville · Apr 26, 2014, 09:32 PM

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.