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Old 10-05-2009, 05:34 AM
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Gifting tax benefits

I was thinking.. Could I buy a home and allow a member my family or friend to live in it for free, in return for maintianing the home?

Before I go on, would the above scenario be legal and what tax implications might there be?

Further, if that individual were to gift me money at any point, is that legal?

Because I can see how that action could be construed as payment for the rent, thus circumventing taxes on what could construed as rental income.


-squidward


Last edited by squidward69 : 10-05-2009 at 05:36 AM. Reason: rephrase question


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Old 10-06-2009, 07:22 PM
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To answer your questions;

Could I buy a home and allow a member my family or friend to live in it for free, in return for maintianing the home?
I suppose you can do that! You may not be able to deduct any expenses though! I don't recommend this as the IRS may come back and assess what amounts to reasonable rental income to you!

Further, if that individual were to gift me money at any point, is that legal?
No! As you have mentioned, the reason is that "this action could be construed as payment for the rent, thus circumventing taxes on what could construed as rental income."

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