Just bought a new condo.

knght311 · #1 02-23-2007, 03:54 PM

I will have a friend of mine pay about 1/2 of the mortgage as rental payments. How are these treated, do I have to include these in my income for the year? Since this is my private residence can I exclude the payments from income?

Thanks.

Nevermind...just figured it out.

If I never sign a rental agreement with him, then I can treat the money I receive each month from him as a gift, non taxable to me.

Now here is the question, can this transaction benefit us both?

Are the gifts that he will be making to me each month a reduction of taxable income?

SossMan · #2 02-23-2007, 04:15 PM

[ QUOTE ]
I will have a friend of mine pay about 1/2 of the mortgage as rental payments. How are these treated, do I have to include these in my income for the year? Since this is my private residence can I exclude the payments from income?

Thanks.

Nevermind...just figured it out.

If I never sign a rental agreement with him, then I can treat the money I receive each month from him as a gift, non taxable to me.

Now here is the question, can this transaction benefit us both?

Are the gifts that he will be making to me each month a reduction of taxable income?

[/ QUOTE ]

Depends on if you like Black/White or if you (and/or your CPA) like to dance in the grey.

black_russian · #3 02-23-2007, 04:33 PM

[ QUOTE ]
Depends on if you like LEGAL or if you (and/or your CPA) like to dance in the ILLEGAL .

[/ QUOTE ]

SossMan · #4 02-23-2007, 04:39 PM

[ QUOTE ]
[ QUOTE ]
Depends on if you like LEGAL or if you (and/or your CPA) like to dance in the ILLEGAL .

[/ QUOTE ]

[/ QUOTE ]

very true.

BradleyT · #5 02-26-2007, 04:43 AM

[ QUOTE ]
If I never sign a rental agreement with him, then I can treat the money I receive each month from him as a gift, non taxable to me.

[/ QUOTE ]

Is this part legal?

'Chair · #6 02-26-2007, 04:36 PM

doesn't he get taxed on the gift?

BradleyT · #7 02-26-2007, 06:16 PM

No. My dad (and his two sisters) get $10K every year from my grandfather as a tax free gift. Just a little way to reduce the tax burden once he passes.

joda mas · #8 02-26-2007, 06:56 PM

"Are the gifts that he will be making to me each month a reduction of taxable income?

No.

Also, it is unlikely that the IRS will see his rent payment to you as a gift.

maxtower · #9 02-26-2007, 09:15 PM

Not only is this income, but if you are renting out your condo, you may disqualify yourself from selling it tax free in a couple years. Talk to an accountant.

SossMan · #10 02-26-2007, 09:19 PM

[ QUOTE ]
Not only is this income, but if you are renting out your condo, you may disqualify yourself from selling it tax free in a couple years. Talk to an accountant.

[/ QUOTE ]

so long as you use it for your primary residence (doesn't matter if you rent out a room) you can take the 250k exemption on CG.