Mike0241. Thank you so much. I marked as the best answer. Please correct me below to make sure if I understand you fully.
Here is more real data:
Her adjusted basis for the property is $615,000 ($565K purchase price in 2016 plus home improvement I estimated about $50K). She lives there since 2016. Her mortgage is $375,000.
The amount paid by me for the property will be $600,000 in 2023. She will pay off the mortgage of 375,000..
1. So there would no gain for her and she can't claim loss either if I understand you correctly.
2. When you mentioned she'll have to file a gift tax return, is it part of 1040 tax return or a separate gift tax return in addition to 1040 return? Because of lifetime gift tax exclusion, it will not incur tax for her as I understand you.
3. My unadjusted basis for determining gain or loss if I sell in the future should be $615,000 in this case, correct?
4. I actually don't understand the paragraph: The amount of increase, if any, in basis for gift tax paid (see § 1.1015-5). Does this apply to my case since no gift tax paid? I thought not, so I didn't add to my unadjusted basis.
Thank you for your advice for a real estate attorney. Should we need a tax account also or more so? Or real estate attorney will cover all?
Thank you for your patience with me. I look forward to hearing from you again.
