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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16579
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Why would an individual transfer real property to a family

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Why would an individual transfer real property to a family member (mother or brother), but continue to report as rental property on their tax return? A sale of the property was not recorded on the individual's tax return.

Would there be an advantage for the other family member to borrow on that property?

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

You are asking if you transfer ownership of the property to someone else, can you still claim rental income on your tax return?

MyVirtualCPA :

The answer would be "no" - the person who owns the property is generating the revenue from renting the property out


I noticed you were unable to join our chat. I needed some more information and clarification before I can give you your "answer."

Are you saying that someone gave someone else property, but retained the rental income? So, mom gives house to son, but mom collects rental income and claims it on her tax return. Then, you are asking if there's a benefit if the son borrows against the house? I am curious what type of benefit you are inquiring about.

Thanks! Please follow up using the reply button below.
Customer: replied 4 years ago.

Sorry for the delay. Your response went into my spam filter and I just retrieved it this morning. I have found many family transfers, but the most common is this - the son transfers property to mom but keeps reporting the income and expenses as his rental property. You answered my question that this is not correct. Additionally, I think there is then borrowing by the mom on the property which will not show up on the son's credit report but the income shows up on his tax return; thus making it appear he has better financial condition. Also it appears the money borrowed by the mom is placed in an investment account by the son appearing the son has a large asset when in essence it is borrowed money. Again inflating his financial condition. Does this make sense?


Also, I found some stocks in an investment account that were sold but no loss or gain was reported on the income tax return. Is there a type of account that would allow any gains or losses to not be reported for individual tax purposes?


This does not sound correct at all. It sounds, quite honestly, fraudulent. Also, there are no types of investments that are not reported on the tax return. However, if in the 10-15% tax brackets, there is no capital gains tax. But this should still show up on the return on schedule D.

Please let me know if you need anything additional. Take a moment to rate my response excellent so that I may receive credit for assisting you today. Thanks again!
Megan C and 2 other Tax Specialists are ready to help you
Customer: replied 4 years ago.

Thanks! You confirmed what I was thinking.

Anytime and thank you for the positive rating. If you ever need another question answered please ask for me. It was a pleasure working with you and I hope you have a great day. Thanks again.