Solved: If my father buys an investment property, but makes me the owner on the title (to minimize inheritance troubles in future), will I be responsible for rental income tax?
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SF2
Returning Member

If my father buys an investment property, but makes me the owner on the title (to minimize inheritance troubles in future), will I be responsible for rental income tax?

 
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Accepted Solutions
DianeW
Expert Alumni

If my father buys an investment property, but makes me the owner on the title (to minimize inheritance troubles in future), will I be responsible for rental income tax?

Rental activity would be reported as follows based on the scenarios you mention.

  1. Father reports any rental activity.
  2. Joint ownership - if the property actually belongs to your father he can claim all rental activity.
  3. You would report the rental activity.  He would not be allowed to claim any income or deductions.   And there is possible gift tax considerations. (A gift of more than $14,000 to one person in a year, although if he is married then they each could gift you $14,000 which is called "gift-splitting" and raises the threshold before gift tax applies to $28,000).

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5 Replies
DianeW
Expert Alumni

If my father buys an investment property, but makes me the owner on the title (to minimize inheritance troubles in future), will I be responsible for rental income tax?

Are you joint owners of the property?
SF2
Returning Member

If my father buys an investment property, but makes me the owner on the title (to minimize inheritance troubles in future), will I be responsible for rental income tax?

We are just deciding what would be the best solution. I think the options would be
- Father as the only owner (and me on a beneficiary deed, which I am not very familiar with)
- Joint ownership (But he claims the rent)
- Me as the only owner
Thank you for your help!
DianeW
Expert Alumni

If my father buys an investment property, but makes me the owner on the title (to minimize inheritance troubles in future), will I be responsible for rental income tax?

@SF For tax purposes, it should be in his name, but you could be joint owner if he wants to do it that way.  This will likely not have any effect on inheritance.  Federal only has estate tax over $5 million, although states do have their own rules. He should check the gift tax rules.
DianeW
Expert Alumni

If my father buys an investment property, but makes me the owner on the title (to minimize inheritance troubles in future), will I be responsible for rental income tax?

Rental activity would be reported as follows based on the scenarios you mention.

  1. Father reports any rental activity.
  2. Joint ownership - if the property actually belongs to your father he can claim all rental activity.
  3. You would report the rental activity.  He would not be allowed to claim any income or deductions.   And there is possible gift tax considerations. (A gift of more than $14,000 to one person in a year, although if he is married then they each could gift you $14,000 which is called "gift-splitting" and raises the threshold before gift tax applies to $28,000).

View solution in original post

SF2
Returning Member

If my father buys an investment property, but makes me the owner on the title (to minimize inheritance troubles in future), will I be responsible for rental income tax?

Thank you for your detailed and helpful answer!
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