Thanks for your reply. Of course I can not take a loss for two reasons: the sale was to a relative and the property was for personal use. Also, I did not want to be faced with allowable depreciation taking the property to a value less than my basis and then having a capital gain.
When my son got the loan, the bank had an appraisal made and the value came in at $240,000. (This is approximately the same valuation as our county tax auditor has for the real estate taxes.) I believe that he will use this as his basis if he decides to sell later.
I intend to file a Form 709 to report a gift of equity of $109,000. (i.e.$240K-$115K-$16K=$109K, the $16K representing my annual allowed gift exclusion) I will then apply this $109,000 toward my 2022 lifetime permitted exclusion of $12,060,000.
Sound correct?
Again, thanks for your reply.
