In January 2018, I purchased a single-family residence for my son and his family to live in. I put 10% down and took a mortgage for the rest. My son rented from me at a Fair Rental Value and I reported it as rental income using Schedule E, claiming depreciation. In late 2020, my son purchased the home under an arrangement where I gifted the equity and he borrowed enough for me to pay off the existing loan and closing costs. The Mortgage company issued me a 1099 S for $465,000, an amount approximate to the value of the home (to facilitate his borrowing). They also had me sign a Gift Equity Letter in the amount of $107,000, which was credited to the Buyer (my son) at closing. How do I report this using Turbo Tax? Is it reported on Form 4797? One concern is whether the gross sales price needs to be $465,000 so that IRS can link up the 1099 S. Or, can I net the gift of equity against it.
Some have advised reporting this using Form 8949. I feel like I am in the swamp on this one.
I know that I also need to report the Gift of Equity on Form 709.
