Question

Regarding Gift Tax

B. Parent gives the rent-free use of the family beach house to adult child. What are the gift tax consequences if: a. Child personally uses the beach house? B. Child rents the beach house to a tenant? Would your answers depend on whether parent regularly rented the property or used it for personal use? Besides the requirement that the donor transfer property, gift taxation requires a donor to make a voluntary transfer. While this requirement may easily be satisfied, sometimes it is not.

Answer 1

Answer to question 3 a, Any gift worth more than $30,000 (if given by both parents . $15000 if given by single parent) will attract gift tax. Even.  As per IRS rules Gift of real estate to adult child is not tax deductible.If the value of the gift exceeds annual exclusion amount , parent must file gift tax return (Form 70G) to report the Gift. But the parent need not pay gift tax if he has not used it for gift and estate tax exemption.

Answer to question 3 b. If the child rents the beach house to a tenant ,the rent is not chargeable to tax in his parent''s income.