We have been renting a single family row house to our son since 2009 at or near FMV as to rent amount. We am considering gifting the house to him during 2024.
We are aware of the gift tax return required and required recognition of gain on the sale – however, we are not sure of the amounts to use for the gift return and for the capital gain. For conversation sake, the cost basis of the property will be about $120K and we plan to “sell” the property to him for an amount just over the cost basis perhaps $125K to avoid IRS scrutiny (and gift that amount). The fair market value of the property based on an actual appraisal in 2021 is approximately $180K today. Is our gift amount $180K? or $125K for the gift tax return purposes. As to the gain we believe the gain would be $125 less $120.
Also, we believe our son’s cost basis going forward would be the $120K (our cost basis at the time of sale) when he goes to sell the property sometime in the future. Can you comment on the accuracy of the above?
