I am trying to gift a rental property to my parents. The property still has a mortgage on it but the bank will allow them to assume the loan.
So would this be consider part gift part sale? If part sale which portion am I selling to my parents? Say if my loan is 100k then would the price of the house be considered sold for 100k?
The property was purchased for 150k and now its worth 250k. I took about 40k of depreciation. So if my parents assumed the loan of 100k. Wouldn't I have a net loss? I know I can't claim loss on this but just want to make sure there isn't any taxable gain either.
Original Cost 150k - Depreciation 40k - Loan 100k (Sale portion)=(10k) net loss? So does that mean I won't have any capital gains on this transfer?
Is my calculations above correct or at least in the ball park?
I know I need to report the gift part on form 709 which turbo tax doesn't support but how do I report the sale portion of the transaction in turbo tax?
Also for Form 709, what kind of supporting document I need for the Adequate Disclosure requirement?
As for the Fair Market Value, do I need a certified appraisal? or could I find recently sold houses around that area and get an average to use as the FMV?
