Question

Will I have to report Capital Gains on the gift of equity

Forum|Forum|1 year ago
August 20, 2024
3 replies
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I'm selling my residence to my son with a gift of equity. Appraisal Value $950,000. My cost basis is $615,000. Selling house for $600,000. I will contribute $10,000 costs for his new loan. I owe a mortgage of $360,000. I will net approximately $230,000. Will I have capital gains on the $230,000?

Or, is capital gains based on cost basis $615,000 and sales price $600,000, which would be at a loss in this scenario. Plus I have my exemption of $500K for married if needed it.

Thank you

Not A Product Question

M-MTax

If you're selling to your son for less than FMV....which it appears......then you have a sale in part and a gift in part and that's controlled by section 1.1015-4

M-MTax

As for your gain, you have none since you're getting $600,000 as the selling price and your cost basis is $615,000. So you have a loss but it's not deductible because this is personal use property.