Renting to my child

[Bradley Elrod]

We recently purchased a home to rent to my college sophomore and her roommates.  

My daughter will not being paying rent.  

1. Should I have her sign a lease agreement?

2. Does the fact that she doesn't pay rent pose any tax implications?

[Nathan Gesner]

Quote from @Bradley Elrod:

We recently purchased a home to rent to my college sophomore and her roommates.  

My daughter will not being paying rent.  

1. Should I have her sign a lease agreement?

2. Does the fact that she doesn't pay rent pose any tax implications?

Make her sign a lease and pay rent like all the other tenants.

1. This gets her in the habit of acting like an adult.

2. The other tenants will see her as an equal instead of the landlord's child living for free.

3. Your books will show actual rent income when you have to sell the property.

4. Your daughter is more likely to respect the property if she's paying for it.

You are allowed to "gift" a certain amount to your child tax-free. Collect her rent payments and gift it back to her for tuition or other expenses while avoiding taxation.

It would be worth talking to a CPA to see how to position yourself best while protecting yourself and teaching your daughter to live like an adult.