@curiousminds wrote:
Read the OP though because that is not what is happening. The 1099-S that the person received reflects the purchase price of the new owner, not the amount that the seller sold for. In these types of deals the home is still being purchased for the appraised value, but the difference between the appraised value and what the discounted sale the seller is willing to sell for, becomes the gift of equity amount, which becomes the buyer’s down payment. What everyone is trying to figure out is, does the seller HAVE to pay capital gains on the entire difference between their purchase price of the property, and the purchase price of the new owners, or can they deduct their gift of equity from that amount of capital gains somehow? And if so, what is the proper way of doing it? Do they just add their gift of equity to their cost basis?
Did you read through the first two answers? That is what you need to know.
