Sale of Rental with Gift of Equity - Spidell

Sale of Rental with Gift of Equity

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Message Board Sale of Rental with Gift of Equity

  • This topic has 3 replies, 4 voices, and was last updated 3 weeks, 1 day ago by William Dewberry.
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    • #257842
      Anonymous
      Member

      My client is planning to “sell” his rental property to his daughter.

      The sales price is $202K with $64K gifted to his daughter.

      On my client’s tax return, is the sales price recorded at $202K or $266K?

      The taxable gain is $84K, including depreciation recapture when recording the sale at $202K.

      A gift tax return will be filed to record the gift of $64K.

    • #258129
      Diane White
      Participant

      It depends. Is the $64K your client is gifting his basis in the property? Gift basis remains the same between parties. Is he selling the rental for $266K and essentially gifting her the $64K as a cash down-payment and perhaps taking back a note?

    • #258207
      Mary Sharp
      Participant

      My clients basis in the property before the sale is $114,437.

      Sales price is $266K.  Dad is gifting $64K, the daughter will apply for a loan from the bank of $202K.

    • #258291
      William Dewberry
      Participant

      Google part gift part sale, there is a formula.

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