Question

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

A) If child personally uses the property they no need to pay any gift tax

B) if they give on rental basis they have to pay tax on the rental income they are getting.