What is the name of your state? MA
A single parent gifts his residence to his adult children but retains a life estate; later he moves out of the house, and converts the property to a rental. His children actively manage the property, collecting rents, making repairs, signing leases, etc.
Can the children report the net rental income/loss on their tax returns as partners in a rental real estate passive activity, or is the parent "required" to report this on his tax return?
If the intention of the parent was to gift the house, and he wants his children to report the rental income on their tax returns, does he have to relinquish his life estate? I realize that the children would not receive the stepped up FMV on the parent's death if this were to occur.
Your opinions?
WDML
A single parent gifts his residence to his adult children but retains a life estate; later he moves out of the house, and converts the property to a rental. His children actively manage the property, collecting rents, making repairs, signing leases, etc.
Can the children report the net rental income/loss on their tax returns as partners in a rental real estate passive activity, or is the parent "required" to report this on his tax return?
If the intention of the parent was to gift the house, and he wants his children to report the rental income on their tax returns, does he have to relinquish his life estate? I realize that the children would not receive the stepped up FMV on the parent's death if this were to occur.
Your opinions?
WDML