Question

Property gift to child who assumes the mortgage

Forum|Forum|2 years ago
December 8, 2023
1 reply
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If I make a gift of real estate to my child, who assumes the outstanding mortgage, which values do I use on form 709? Also, the value has increased since I purchased; will I need a Schedule D for capital gains, and which values do I use there?

More details: the title transfers to my child; I remain as a guarantor on the mortgage where my child is the primary mortgage holder.

E.g.:

My cost basis = 1,000,000

Outstanding mortgage = 700,000

FMV = 1,200,000

Thanks you.

Not A Product Question

M

Mike9241

have you checked with the mortgage company about transferring primary responsibility for payment from evidently you to your child? many would treat this as a sale making the mortgage due immediately.

P

pokey99Author

Thanks for your reply. Yes, the mortgage company in fact suggested this route. The mortgage will belong to my child, who will be responsible (but I will remain a guarantor in the case of default).

A

Anonymous_

Employee

Based upon your figures, and the assumption of the mortgage, the amount of the gift would simply be the FMV of the property on the date of the gift less the mortgage balance that was assumed (i.e., the equity in the property).