"...she told me the amount on the 1099-S will be the purchase price. "
Correct. And the purchase price should NOT include the gift of equity, if the 1099-S is prepared correctly.
If you think about it, how can a gift that the seller is giving be considered part of the gross proceeds received by the seller (Box 2 of the 1099-S)? That makes no sense.
Per Quicken Loans, which I think is the nation's largest mortgage lender, "a gift of equity reduces the sale price of a home (aka the cost basis)."
https://www.quickenloans.com/learn/gift-of-equity#:~:text=Negative%20effect%20on%20home's%20cost,pay....
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
