Jane
Member
- Location
- Olympia,Washington
Can a landlord get a tax break for letting a tenant live in a house without paying rent? Or some other perk?
Random question about tax breaks
- Thread starter Jane
- Start date
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It might be considered a "gift" and gifts over a certain amount are taxable.
https://www.investopedia.com/terms/g/gifttax.asp
When my father died and my mother moved in with my sister, I bought my parents' home from my mother with my mother owner financing.
The real estate attorney who helped us with that transaction told us that my mother had to charge me the current interest rate [9% at the time] or it might be considered a gift and a gift tax might be due.
It might be considered a "gift" and gifts over a certain amount are taxable.
https://www.investopedia.com/terms/g/gifttax.asp
When my father died and my mother moved in with my sister, I bought my parents' home from my mother with my mother owner financing.
The real estate attorney who helped us with that transaction told us that my mother had to charge me the current interest rate [9% at the time] or it might be considered a gift and a gift tax might be due.
Jane
Member
- Location
- Olympia,Washington
So the landlord gets nothing out of it?
In the case I outlined, he might have to pay the federal government a gift tax.
And, since the house is no longer a rental, he loses rental tax breaks.
Jane
Member
- Location
- Olympia,Washington
I'm just trying to figure out the why of the situation.
If the occupants aren't paying rent, it's no longer a rental.
Jane
Member
- Location
- Olympia,Washington
I couldn't think of any other reason he would do that,but you are probably right,he is just a really nice guy.
Happyflowerlady
Vagabond Flowerchild
- Location
- Northern Alabama
There can be reasons that the Landlord would let people live in a house rent-free. If the house has been destroyed by a previous tenant, or through some other reason, somethings the landlord lets the new tenants fix up the property in exchange for rent.
It could also be that the landlord wants someone living in the house just to take care of it, especially if it were during a harsh winter, and pipes could freeze if the house sat vacant all winter.
For a few years, we were caretakers for our landlord, and lived in a mobile home on the property. The landlord and his wife often went on trips, and when they were gone, we watered the lawn and just did security checks on the beautiful home where they lived. If he needed help with a project, my husband would help out around the property.
We didn’t get paid anything for what we did, but we lived rent-free, and our landlord had dependable people watching his property when he was gone; so it was a good situation for both of us.
Camper6
Well-known Member
- Location
- Northwestern Ontario Canada
Wait. Wouldn't the "gift" be on the recipient to report and not the landlord?
Well I don't think all the rental tax breaks are gone.
It's still a rental home without bringing in any revenue to report.
For instance municipal taxes, depreciation?
This is interesting. Who decides it's no longer a rental home?
Did you see my link ?
IRS rules are the gift-giver must pay a gift tax if the gift is over a certain amount.
IRS
Aunt Bea
SF VIP
- Location
- Near Mount Pilot
I'm not sure if it is still true but it used to be that your rental property deductions could not exceed the cash income from the property for the year, any excess deductions could be carried into the future to reduce taxes on future rental income.
Catlady
Well-known Member
- Location
- Southern AZ
I'm just curious, why did you leave such an ideal situation?
Re the OP question, I had a rental once, don't know if the rule is still the same. But, I was told that the rent charged should be at least at ''minimum market value'', otherwise I could not claim tax deductions for that rental unit.
Butterfly
SF VIP
- Location
- Albuquerque, New Mexico USA
I agree. Why should the landlord get a break? Doesn't make sense.
