Tax Law (Questions About Taxes)/gift

Advertisement


Question
Mr Stancil,

My aunt allows my wife and my 4 children and I to live in her 2nd home and does not charge us rent. She does not live there and there is no lease.She considers this a gift and does not require anything of us in order to live there. We pay for all our own utilities (in my name) and living expenses and take care of the place like a normal renter would. My understanding is that the free rent would not be considered income to me for tax purposes. She does not file a gift tax return because the fmv of the rent divided by 2 (a gift to my spouse and I) falls under the annual exclusion. Am I correct in my understanding of this?

Answer
Mike,

Thanks for your question.

You are absolutely correct.  A gift is never taxable income to the recipient. As long as the value of the gift is under $14,000 (per recipient) the donor does not have to file a gift tax return and there are no tax consequences to her.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

All Answers


Answers by Expert:


Ask Experts

Volunteer


John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

©2016 About.com. All rights reserved.