Actually the basis needs to be considered with and without the gift ... technically the house was partially bought for an amount and a portion was gifted.
So you have the straight up cost basis portion for the purchase price and then a basis for the gift. This is where is gets tricky as a computation needs to be made for the gift basis using both a portion of the original purchase price and the fair market value at the time of selling. Gift basis used for the sale of the home would depend on if there is a profit or loss on the sale later when it is sold. Either get help from a local tax pro who can do the math for you and/or explain it to you OR read up on this subject on the IRS site : https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc/prope...
