Posted on: 28th Mar, 2009 05:17 am
If Mother in Law has title to property and allows SIL (wife deceased) to build a house and live on property, does IRS consider SIL house as a gift to MIL? Somebody said it is and the IL's should set up an LLC.
Hi
I think since mother in law owns the land and the house is built on the same property, it would be considered as a gift to the mother in law. But what is the logic behind setting up an LLC?
I think since mother in law owns the land and the house is built on the same property, it would be considered as a gift to the mother in law. But what is the logic behind setting up an LLC?
LLC be set up to avoid the 'gift'. MIL would contribute property to LLC. LLC would (on paper) "purchase" the $1M house and SIL would pay rent to LLC. Rent would be equal to SIL paying mortgage on house, property tax, utitlities, upkeep etc. Sounds crazy to me.
It does not sound like she is giving him the land, just allowing him to put a building up. I don't see any gift.