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Finance - Investments Sub-forum: Non-Actuarial Personal Finance/Investing

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  #1  
Old 01-12-2018, 01:31 PM
lulzEMH lulzEMH is offline
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Default Renting A House at a Loss

Seems like several here have rentals.

Could one buy a house as a rental and rent it to a family member below cost so that they are effectively losing money? I.E. vs just gifting money to a low income family member (no tax impact) instead creating a loss for the higher income family member?

Guessing there is IRS code to make this unattractive but figured its work asking. Even if legal it seems like it could be a huge PITA but it seems like something that parents might do a lot for kids in college/just out of college.
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Old 01-18-2018, 10:53 AM
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mathmajor mathmajor is offline
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People do that a lot: buy a house for their kid during college. Near me there's a prominent university very much near a low-income neighborhood where houses go for $50-80k but it beats the pants off the cost of 4 years of dorm living there. I know someone who did that.

No rules against it. You can charge whatever you want.
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Old 01-18-2018, 11:25 AM
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You cannot rent out property at below fair market value and then take a "rental loss" on the property in your taxes.

If you rent below fair market value, you have to treat the house as a second residence.
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Old 01-18-2018, 11:27 AM
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Whiskey Whiskey is offline
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Quote:
Don't make gifts to your relatives that are designed to help them pay the rent. This can backfire because the net amount of rent charged (the rent, less the gift you make) can wind up below fair-market rent and disqualify the property as a rental.
Relevant article:
https://www.cbsnews.com/news/when-re...the-tax-rules/
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Whiskey "on tap" - 12/31/15
Spoiler:

Bourbon(16)
Pappy Van Winkle-Family Reserve 15yr & lot "B" 12yr
Baker's 7yr
Blanton's
Knob Creek - 9yr
Basil Hayden
Maker's Mark - 46 & Cask Strength
Woodford Reserve
Jack Daniel's-Gentleman Jack, Single Barrel & Old #7
Four Roses Small Batch
Noah's Mill
Kirkland Bourbon - 7yr

Rye(6)
Angle Envy's - Finished Rye
Ravenswood Rye
Bulleit
High West - Double Rye
Whistle Pig - 10 yr
Old Overholt

Scotch(4)
Glenfiddich - The Distiller's Edition
Tomatin 12yr
The Dimple Pinch - 15 yr
Dewar's White Label

Irish(6)

Middleton Very Rare
Redbreast 12yr
Bushmill - Single Malt 16 yr
Connemarai
Jameson - Caskmates Stout and Regular
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  #5  
Old 01-18-2018, 02:18 PM
lulzEMH lulzEMH is offline
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Quote:
Originally Posted by Whiskey View Post
Thanks Whiskey. Not really surprised I guess. A kind soul had provided a link to another forum where it is discussed as well.

It seemed to easy to have not been banned.
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