Rental Property Gifted Away - how to report disposition?

Forum|Forum|2 years ago
March 29, 2024
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My wife has a rental property that she has 10% ownership in. Her Mom and sister have the remaining 90% ownership in the rental property. My wife gifted her 10% ownership to her mom in 2023. I know we have to file form 709 gift tax separately. For the 2023 Tax filing season we did receive some income and we're reporting that in the Schedule E, but I don't see how to dispose of this property within Turbotax. Under the "Do any of These Situations Apply to This Property", there's an option to select "I sold or disposed of this property in 2023" but we didn't sell it and when I look at the explanation it says "Do not check this box if the disposition was to a related party", so not sure if I should check this box or not since we did gifted it to her mom.

Do we still check the "I sold or disposed of this property in 2023" or is there somewhere else within Turbotax where we dispose of this property as a gift? Or because we gifted it away to her mom this does not apply and don't report rental income anymore the next year?

Thank you

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Best answer by DaveF1006

No, just leave this section blank since it was gifted to a related property. Next year you won't report this on your return. . Here are a couple things you and your mother need to keep in mind for tax year 2024.

Her cost basis for depreciation is your original cost basis less any depreciation you have taken in the past plus your share of capital improvements that were made during the time you owned your share of the house.
This will mean your Mom will need to increase this cost basis to her existing share of the ownership of the house next year.

Please, let us know if you have any further questions.

DaveF1006Answer

Her cost basis for depreciation is your original cost basis less any depreciation you have taken in the past plus your share of capital improvements that were made during the time you owned your share of the house.
This will mean your Mom will need to increase this cost basis to her existing share of the ownership of the house next year.

Please, let us know if you have any further questions.

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