@Lilbunny13 wrote:
I am pretty sure she did not do the gift tax thing. And I get what you are saying but still do not understand. But thank you for replying though.
See an attorney or tax specialist.
If you got a 1099-S at the closing, you must report the sale even though it might not be taxable, because the IRS will be trying to match that form to your tax return and if it is missing, they will send you a letter and a bill.
If you did not get a 1099-S, and your gain is less than $250,000 for a single person or $500,000 for married filing jointly, you don't have to pay capital gains tax (because you lived in the home more than 2 years out of the last 5 years and you owned it more than 2 years).
Your gain is the difference between the selling price and your cost basis. Generally, your cost basis in a piece of property is what you paid for it. But because this home was partly a gift, cost basis will be more difficult to figure out.
If the selling price is less than $250,000, then your gain must be less than $250,000, even if you report your basis as zero, and the sale won't be taxable.
But if the selling price is more than $250,000, you will need to do some investigation to determine what your proper cost basis should be. Since you seem unsure of the situation, I suggest finding a tax advisor or attorney to assist you. If you are audited, and can't prove the cost basis to the satisfaction of the examiner, they can tax the whole sale.
