On Jan 3, 7:58*pm, Katie <katiej_1...[at]yahoo.com> wrote:
- quote -

Thank you, Katie, for this simplified approach to a very simple
question. I would fully agree with you.

This seemingly is the approach given the contextual framework. Now if
the facts were stated differently, then clearly a different response
might be appropriate, including potentially the embezzlement issue
raised by another responder (of course, for it to be embezzlement it
would appear that there was an intent to embezzle, as opposed to blind
ignorance in this instance).

George

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <ed390959-fec4-4772-adcf-0783a8bc7ce3[at]v5g2000prm.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -

Easy: owning costing you an additional $3,000/year in income tax
can have a significant effect on the decision.

Seth

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"removeps-groups[at]yahoo.com" <removeps-groups[at]yahoo.com> wrote:
- quote -

I doubt that imputed rent causes most people to rent. In San Francisco
75% of the residents rent - because the cost of real estate is so much
higher than in the rest of the country.

Getting back to the issue, imputed rent might be taxed in some
situations - it's not always exempt. When talking about a family
member it could be considered either a gift of an obligation of
support, neither of which are taxable.

Speaking of rent and income, apparently a lot of residents of DC will
be renting out their homes for large sums of money to people attending
the inauguration. For federal income tax purposes, if a home is rented
out for two weeks or less in any given year, the rent received is tax
free.

Stu

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 7, 6:08 am, suf...[at]hotmail.com wrote:

- quote -

How can taxing imputed rent have such a large effect (ie. 2/3 are
renters). There may be other, perhaps larger, reasons for why most
everyone is renting.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 3, 5:44*pm, suf...[at]hotmail.com wrote:
- quote -

I see I didn't address the question "Why isn't there imputed rent for
their rooms in the house the taxpayer lives in?". The answer is
because the law is otherwise. It's an interesting point related to
economic choices made by societies and their governments.

Imputed rent is taxed as income in a few countries -- as I recall from
college economics Canada used to be one and the following journal
article says that the UK was another as recently as 1960:
http://www.jstor.org/pss/2325629 . Googling <imputed rent homeowner
tax> will yield lots more discussion in the literature.

I know that Switzerland taxes imputed rent today: imputed rent is
added to cash income for income tax purposes to equalize the situation
between homeowners and tenants. The result, in Switzerland, is that
2/3 of the population are renters not owners, roughly the reverse of
the US and UK (post-Thatcher) situation. The subprime crisis, which
thus far has escaped Switzerland (although not its international and
its private banks because they invested abroad and bought those duff
CDOs; only its cantonal banks have been exempt), tells us that perhaps
some people are not suited to be homeowners.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 4, 4:23*pm, Mark Bole <ma...[at]pacbell.net> wrote:
- quote -


Or take a chill pill <G> . Way too complicated, Mark. Just relax and
think of it as expense reimbursement. That's all it really is. Dad
owns the property, pays the mortgage, maintenance, etc. If the $300
were paid to Dad, I'd say he had rental income. As it is, it's just
expense sharing. Keep it simple.

Katie in San Diego

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Harlan Lunsford wrote:

- quote -

It's a possible IRS objection I'd be concerned about...

- quote -

I'm still trying to assimilate all the interesting items that have been
brought up in this thread.

Like many, given the OP's facts as presented, I would call it expense
sharing in a qualified second home, congratulate the dad for being so
generous (and finding a clever way to get his young adult offspring to
actually leave home), and leave it at that.

It's the what-if's that keep me stuck on this -- suppose, in addition to
his share of groceries and electricity, the tenant *was* paying an
amount that approximated fair market rental for a room in a house? Given
the other reply that use by a family member counts as personal use by
the taxpayer, the OP would only be hurting himself by not treating this
as his rental income, and deducting depreciation, insurance, repairs,
etc on the rental portion, while still getting the mortgage-interest
deduction on the personal-use portion. I guess you'd have to run the
numbers both ways to see if the rental income to the dependent without
any deductions incurs less tax than rental income to the owner with
deductions.

Or is the son actually renting the "gifted right of occupancy", as
another reply mentioned? Is that real-type property or intangible
personal-type property? Is this a passive activity with active
participation? Is all the investment at risk? If the property is sold
at a loss, would any of it be recognized for tax purposes?

Eh, time for me to go get some fresh air.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 3, 5:58 pm, Katie <katiej_1...[at]yahoo.com> wrote:

- quote -

Actually, I think on what the $300 is used for. The original post
said: "Renter pays one son $ 300.00 ( not me) each month who uses it
to pay utilities, food etc". If the etc includes the renter's share
of property taxes or mortgage on the house, or just profit for the
sons or father, then there is rental income. If it's just for
splitting groceries, phone/internet bill, beer bill then there is no
rental income. $300 seems kind of low, so I guess it's the latter.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Mark Bole wrote:
- quote -

If you don't object, why not?
- quote -

If property owner has no objection an occupant may indeed rent to another.

ChEAr$,
Harlan

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Arthur Kamlet wrote:
- quote -

the parents are not living in the house that the son is using.
Therefore, it is the main home where the child would have to
live. This was in response to D. Stussy's comment, which I
assumed belonged to the same set of facts.

If we do not use this instance, but use a different set of facts,
then the child could live with the parents in any number of homes
to meet the > 6 month rule.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <qaX7l.15912$Ws1.6233[at]nlpi064.nbdc.sbc.com> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:
- quote -


I thought Main Home was required for HoH qualifying person, but not for
dependency exemption purposes. For a QC to meet the residency test for
the dependency allowance, won't any old house do?
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

D. Stussy wrote:
- quote -

parents have more than one home, only one of those homes is
considered the main home. The QC would have to live in the main
home for more than six months to continue to be a QC. Temporary
absence is OK.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Mark Bole" <makbo[at]pacbell.net> wrote in message
news:vMK7l.8125$8_3.3048[at]flpi147.ffdc.sbc.com...
- quote -

Not necessarily. However the tradeoff is that it would eliminate any
net loss (except for items otherwise allowed on Schedule A - cf.
Section 280A).

- quote -

Yes. Member of immediate family and dependent.... However, less than
FRV could also kill any claimed loss.

- quote -

How do you conclude it is not used by the OP? Use by an immediate
family member and dependent is his use....

IRC Section 262: ...or FAMILY expense. (emphasis added).
Section 280A(d)(2)(A): Personal use includes any use ... by any
member of the family of the taxpayer ...
Family (267(c)(4)) of Taxpayer: Spouse, any sibling, any ancestor
(*parent), and any descendant (*child).
* - no generational limit.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Alan" <sfcnm-mtm[at]yahoo.com> wrote in message
news:luM7l.490$%54.411[at]nlpi070.nbdc.sbc.com...
- quote -

Note this: Do the children live with the parent? No. However, do
they live in ONE of the parent's properties? YES. There might be a
way around the new rules when parents have multiple residences....

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Phil Marti wrote:
- quote -

Suppose my college-age son lives with me in *my* house. Can he rent out
a spare bedroom in my house and claim it as his income, and thereby
allow me to assert that I am not renting out any part of my house, nor
earning any income from it?

How is this situation any different from the OP? Or if it's not, then
should I conclude there is nothing in the law stating that receipt of
rental income requires that you own the property generating the rents?
(This seems to be what Pub 527 indicates.)

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 2, 10:23*am, "tex shalter" <a...[at]invalid.com> wrote:
- quote -


I think some of us are making this way too complicated. To me it
looks like a second home for dad, eligible for Schedule A deduction of
mortgage interest and property taxes. He allows sons to live there
(personal use). Sons take in a friend who agrees to share expenses to
the tune of $300/mo. No income, no deductions (except for dad's
interest and taxes), no depreciation, no complications. On sale of
house dad will have capital gain or nondeductible personal loss,
depending on the market.

Katie in San Diego

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 3, 4:42 am, "Phil Marti" <prm20...[at]verizon.net> wrote:
- quote -

<...
- quote -

<...
This thread raises some interesting questions which only go to show
that nobody can correctly advise on taxes without having all the
facts:

-- If (contrary to likely facts) the student offspring are not
dependants for which the father is required to provide housing (and
given that the cost of the housing is not paid directly to the
university as tuition) then the rental value of the house may be
subject to gift tax if it exceeds the annual exclusion:
http://www.nydailynews.com/archives/...how_dad_s.html
(Eliot Spitzer's Manhattan town house, owned by his father) This is
quite a different issue from imputed rent as income, which seems
unlikely. Nor is the amount of money in question enough to create a
dispute with the IRS involving recharacterization and, potentially,
double taxation (perhaps because a statute of limitations has
expired): United States v. Dalm, 494 U.S. 596 (1990) (gift tax and
income tax).

-- Subletting the gifted right of occupancy, or part of it, would not
on its face seem to raise an issue of agency or, even less, theft. A
proper agreement might justify assigning all or part of the proceeds
to "shared expenses". But convenient characterization by the recipient
of money is not binding on the IRS (nor, sometimes, on the payor:
there's a case reported in the UK press of a Spanish family that was
allowed to occupy a vacant Spanish vacation property and payment to
the owner for utilities was deemed by the Spanish court to be rent,
thus qualifying the payor as a protected (or "sitting") tenant who
could not be evicted).

-- Any excess of income over expenses is likely to be small. There is
in practical terms some flexibility in the way it is accounted for.
Since services of some kind are provided it might be deemed B&B
income, and become subject to SET and pensionable. That works best
when an entity is established to "manage" the business: some portion
of "unearned" income can reasonably be converted to "earned" income,
thus (among the other things just mentioned) excluding it from
taxation at parents' rates if the offspring are minors.

-- It doesn't seem that there is anything to depreciate based on the
facts given since the father is probably not deemed a "landlord"; nor
that the owner will be entitled to any exclusion of capital gain. But
in this market there isn't any likelihood of gain anyway.

The above are volunteered as ideas for the curious, not as tax advice.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Mark Bole" wrote:

- quote -

I don't think so, since the owner of the house isn't the one doing the
renting. As I said in my original post, it looks to me like the son has the
rental income.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Mark Bole wrote:
- quote -

Question" from 10/19/08 and my two comments regarding a change in
domicile when dealing with children who go off to college.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Harlan Lunsford wrote:

- quote -

In addition to my questions (other post) regarding whether the mortgage
interest is fully deductible as a second home of the taxpayer in this
case, I'm also curious about other "facts and circumstances" that might
come into play here. Insurance coverage, liability for the tenant,
possible rent control, and other issues come to mind.

If a QTP (section 529 qualified tuition plan) were involved, would the
two sons have any room and board expenses for purposes of tax-free
withdrawal?

If a client were to ask about setting this up before actually buying
such a property, what would be good advice? To treat the whole thing as
a true for-profit rental activity, and explicitly give money to the sons
each month to cover their share of the rent, while collecting the rent
from the third tenant? Then the groceries/utilities payment becomes
true expense sharing, and the taxpayer probably gets a deductible loss
on his Schedule E, especially if the property is vacant during school
breaks.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >