Hi Hal_Al - Can you clarify your post above. I’m in a similar situation. I want to sell my rental property to my sister at the at the remaining loan balance and do a Gift of Equity up to the FMV. I’m getting confused on the Capital Gains (if any for the giver). Scenario to put some figures:
Basis $410k
Loan Balance $180k
FMV $650k
Gift $650k minus $180k net $470k
Capital Gains ? = $650k minus $410k = $240k or is it ZERO since my Cost Basis will be transferred to my sister. And she will pay any capital gains when she sells ?
What would the 1099-S show. The title company I had talked to said the 1099-S would show the FMV.
I was reading this "<a rel="nofollow" target="_blank" href="
https://www.law.cornell.edu/cfr/text/26/1.1001-1#e"">https://www.law.cornell.edu/cfr/text/26/1.1001-...> and from this <a rel="nofollow" target="_blank" href="
https://ttlc.intuit.com/questions/3357256-does-gift-of-equity-create-capital-gain-or-add-to-cost-bas...> Which you had contributed to the conversations as well. Obviously, I’ll be consulting with a Tax Lawyer or CPA, when we do this, but Really want figure out or at least understand the Capital Gains (if any). If I have to claim CG, then what’s the point of gifting it when I have to pay tax on something I’m not receiving.
Thank you.
