Yes, he has gifted the house to you and he (or his legal representative) will need to file a 709 Gift tax return to report the gift if the amount of the gift is more than $15,000. To determine the amount of the gift;
- You will need to know your dad's adjusted basis in the house. This is the price he paid for it originally plus improvements made since he has owned the house.
- The fair market value (FMV) of the property at the time the donor made the gift.
- The amount of any gift tax paid on the gift. If there hasn't been any, then disregard this.
If the FMV of the property at the time the donor made the gift is equal to or greater than the donor's adjusted basis, your basis for the gift is the donor's adjusted basis just before the donor made the gift.
If the donor paid a gift tax on the gift and made the gift after 1976, increase your basis by the gift tax paid on the net increase in value. To figure out the net increase in value or for other information on gifts received before 1977, see Publication 551, Basis of Assets. As I mentioned, if he hasn't paid a gift tax already, then disregard this point.
Here are the instructions for filling out form 709 as well as additional information you may find helpful.
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