Question: Our daughter recently got divorced. We own a condominium in Surprise that we have used as a second home. We are now letting our daughter and her two children use this Surprise condominium rent-free. Do we have any gift-tax problems by letting our daughter live in this Surprise condominium rent-free?

   Answer: Probably not. Although the annual fair rental value of this Surprise condominium is probably a gift to your daughter, there is an annual gift-tax exclusion of $26,000 for a husband and wife ($13,000 for a single person) to any individual such as your daughter. Therefore, unless the annual fair rental value of the Surprise condominium is in excess of $26,000 (and there are no other gifts to your daughter from either of you), there should not be any gift-tax obligation.

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