You don't mention your basis and depreciation taken (or could have been taken)
Your adjusted basis is the original cost plus improvements less depreciation.
If you have been renting since at least 2009, that means 15 years of depreciation or at least half the original value.
If the Fair Market Value today is 180,000 I would assume your adjusted basis is a lot less than 120,000. If you purchased the rental for 120,000 your adjusted basis would be more like 50,000 (120,000 basis less 70,000 depreciation) meaning anything you sell for over 50,000 to 120,000 would be depreciation recapture (ordinary income up to 25% tax rate) and anything over 120,000 would be capital gain.
If you sell it to your son for 125,000, you would have 70,000 ordinary income and 5,000 capital gain and 55,000 gift tax.
If you sell it for 110,000 you would claim 60,000 depreciation recapture and your son would need to claim the remaining 10,000 when he sells.
Gift is FMV less selling price (180,000 - 125,000 = 55,000)
Property that is inherited gets the step-up for basis and no depreciation recapture.
@JAF3
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