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Posted by joetaxpayer on March 12, 2008, 10:15 pm
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davidegriffin@gmail.com wrote:
> Hello, Here is question on residential rental property that the IRS
> publications don't seem to address. We have own a rental property for
> the past five years. We had tenants for all that time, collected
> rent, and handled it as a rental property on our federal return.
> However, for 2007, one of our daughters and her husband have lived in
> it for the entire year. We have not charged them rent. Over the long
> term, we still consider this property a rental. My daughter may live
> it in one more year, but after that we may rent it again (or possibly
> sell it). So, for 2007, can we treat this property as a rental? If
> so, can we deduct all the usual rental expenses -- maintenance,
> repairs, etc. -- or only the depreciation? Thanks for your advice on
> this!
I am unable to back this up, my google powers failing me.
I understand that there is an imputed rent, similar to if you tried to
lend money to a child interest-free. There is a market rent you must
take as income, and if you are gifting the value back to them, it's a
gift subject to the gift limits ($12K/person). So if it's you and your
wife, and daughter and son in law, there's $48K total you may gift. But
the rent must be claimed as income. I may be mistaken, but this would
stand to a reasonable conclusion as "there ain't no such thing as a free
lunch".
Joe (hopeful someone will cite a reg or pub to contradict or corroborate)
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