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Financial Planning / Tax Strategies
|Subject: Re: Buying Second House for Parents||Date: 10/27/2013 3:53 PM|
|Author: TMFPMarti||Number: 119417 of 122040|
If your parents can qualify as your dependents, you shouldn't need to be concerned about fair market rents, gifting or a schedule E. Like minor children, they would be your dependents that you could claim as dependents on your tax return.
Just a note for people who tend to grab one post and run with it. This is the first time in this thread that the issue of dependency has been raised, and it carries its own can of worms. I'm not so convinced that dependency eliminates any gift tax consideration. Pros?
And if they require dependent care and you are working, you may also be eligible for the dependent care credit.
Again, in the context of this thread (buying a house for the parents to live in) they would not qualify OP for the dependent care credit even if they needed 24/7 care that OP paid for. The qualifying person for that credit must live with you for more than half the year. After all, the point of the credit is to give you a little break since you have to hire help while you go make a living instead of providing the care yourself.
See Pub 503.
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