"income" from rental property

The transaction is either a rental, an installment sale, or a lease-option (among other more obscure possibilities) -- whatever it actually is, that is how it should be taxed.

Just because the daughter sends money to the mortgage holder or county assesor does not make it other than a rental. In many (most?) U.S. states real estate sales are invalid unless they are in writing, so there is no such thing as a "verbal" installment sale. This looks/quacks like a rental to me becase the daughter has no title nor solid claim to title.

Steve

When the building is signed over to her, there may be gift tax consequences. If you're a US citizen or resident, you're allowed to give 13k, 26k, or 52k to a person tax free (the higher limits apply if you're married and your spouse agrees to give the gift, etc), and anything beyond that either uses up your lifetime exemption or is taxed at gift tax rates. Once the property is hers, she deducts the mortgage payments. But it might be more complex.

There is no transaction (yet). I understand there would be gift tax implications. Basically want to know if the taxpayer has achieved anything if she stops collecting actual rent and lets the daughter pay the mortgage and taxes. I don't believe she has, but thought I'd check to make sure. Thanks

If the daughter makes the current

All of it.

I'm thinking that, at minimum, the principal

No. When a tenant pays bills on behalf of the landlord, it's considered rental income (and the expenses, if otherwise qualified, are rental expenses).

-Mark Bole

Have you considered spending a few bucks on some professional advice to help you minimize the taxes on the current use and eventual disposition of this building? As they used to say in the oil filter commercials, pay me now or pay me later.

I admit being overly sensitive to these things at the moment since I've just spent 3 weeks cleaning up behind a family that didn't believe in spending money on lawyers. It was only after a childhood friend's mother died last fall and I pointed out to him that if something happened to him without his getting his papers in order everything would go to the state that he finally got around to doing something in January. He died in April, leaving me his executor with a giant mess to clean up. Aside from the additional executor fees because of the additional time and the additional work needed from an accountant now, there's the matter of the capital gain on the sale of his deceased aunt's home. "Oh, I don't need to do a will and spend all that money. For $8 I can just add [nephew] as a joint tenant."

I can't tell from your post what is happening now, but I'd wager that it's not being handled correctly on your tax return. Figure out what you want to do, bundle up everything, and go pay an accountant for some advice. It will cost far less than trying to clean it up later.

Phil Marti Clarksburg, MD