Thanks for the info on your father signing the property over to you by use of a Quit Claim Deed. That does change the answer to your question as the property is considered a gift.
To figure out the basis of property received as a gift, you must know three amounts:
- The donor's adjusted basis just before the donor made the gift.
- The fair market value (FMV) of the property at the time the donor made the gift.
- The amount of any gift tax paid on the gift (Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return).
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- If the FMV of the property at the time the donor made the gift is equal to or greater than the donor's adjusted basis, your adjusted basis is the donor's adjusted basis just before the donor made the gift.
- The basis of the gift in the hands of the giver is the basis for the receiver of the gift. This is usually the case in a rising property value market.
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- If the FMV of the property at the time the donor made the gift is less than the donor's adjusted basis, your adjusted basis depends on whether you have a gain or loss when you dispose of the property. If this is the case, please refer to more instructions at: https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc
For example: The property was purchased for $18,000 in 2001 by your father.
The FMV of the property was $25,000 at the time of the quit claim deed in 2009.
Your basis for the gain/loss calculation is $18,000, your father, the giver's basis in the property.
