Buying a condo for daughter. Rent to her? Give to her? Tax implications for me?
My taxes went sky high when I took money out of IRA to buy condo for daughter. It increased my taxable income level so that my taxes and my Medicare costs went up. Yikes! Should I put the condo in her name as a gift, sell it to her for $1.00 or rent it to her? Just want to get out of this higher tax bracket.
Terry Says
You’ve already done the tax damage. It was a very expensive mistake. And your Medicare premiums will remain high for at least two years.
Rental income from your daughter would have to be declared, perhaps permanently moving you into a higher bracket. This is something to discuss with your accountant BEFORE you make another emotional decision.
As an alternative, your daughter could give you $1000 per month as a “gift” without any tax consequences to either of you. But you couldn’t structure it as a rental agreement. That seems to make sense.
I’d advise keeping the condo in your own name. And updating your estate plan to a revocable living trust, then putting title to all property into the name of your trust.
