![]() ![]() She will pay off the mortgage of 375,000.ġ. The amount paid by me for the property will be $600,000 in 2023. Her adjusted basis for the property is $615,000 ($565K purchase price in 2016 plus home improvement I estimated about $50K). Please correct me below to make sure if I understand you fully. While this can be done without a real estate attorney, the use of one is advisable so there are no surprises down the road, If a gain, she will qualify for the home sale exclusion of $250,000 if she owned and occupied the house for any 2 out of up to 5 years before transfer.īetter check with the mortgage company because most mortgages have a due-on-sale clause which means she'll have to pay off the full mortgage. she has made a gift of $250,000, the excess of $850,000, the fair market value, over the amount realized, $600,000. her gain is $200,000, the excess of $600,000, the amount realized, over her basis of $400,000. assume her basis in the property is $400,000 (and a fair market value of $850,000). She transfers property to you for $600,000. However, no loss is deductible on such a transfer if the amount realized is less than the adjusted basis. Where a transfer of property is in part a sale and in part a gift, she has a gain to the extent that the amount realized by her exceeds her adjusted basis in the property. She has to report the sale on her tax return following these rules see example (2) The amount of increase, if any, in basis for gift tax paid (see § 1.1015-5).įor determining loss, the unadjusted basis of the property in your hands shall not be greater than the fair market value of the property at the time of such transfer (ii) her adjusted basis for the property at the time of the transfer, and ![]() (i) The amount paid by you for the property, or (1) Whichever of the following is the greater: Where a transfer of property is in part a sale and in part a gift, the unadjusted basis of the property in your hands is the sum of. Your basis for determining gain or loss if you sell. She'll have to file a gift tax return because she gifting you 1/4 million but there it's unlikely she'll have to pay a gift tax since the lifetime exclusion is in excess of $12 million. ![]()
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