Disposition of rental property by gifting

[user17727371258]

I have rented a condo to my son for the last 10 years at fair market value.  We have gifted the entire property to him in 2025.  Should I check the box that the property was sold or disposed of in 2025 or would I leave it blank since he is a related party?

[M-MTax]

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@user17727371258 wrote:

I have rented a condo to my son for the last 10 years at fair market value.  We have gifted the entire property to him in 2025. 

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In the case of an outright gift, you should indicate that you converted the property to personal use on the date of the gift. Your son will take your basis and assume your accumulated depreciation.

You will likely also need to file a Form 709 for the gift (a form which TurboTax does not support).

[ThomasM125]

You would check the box that you disposed of the property and enter the date disposed of so the current year depreciation will calculate properly and to remove it from your program going forward. Also, if you had any assets that you took special depreciation on, you would have to show those as being retired as you may need to recover some of that advance depreciation as income. You may not have any of that though as it is less typical with residential rental property.

[M-MTax]

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@ThomasM125 wrote:

You would check the box that you disposed of the property..

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No, @user17727371258 needs to check that the property was converted to personal use. The Guidance informs users accordingly.

Explain Disposed of Property?

Check this box if the entire interest in this property was disposed of in a fully taxable transaction.

Do not check this box if the property was part of a like-kind exchange.

Do not check this box if the disposition was to a related party.

Do not check this box if the disposition was reported using the installment method, until the final year of payment.

If this box is checked, losses are not limited by the passive activity rules.

Check the box below in the Property section:

[M-MTax]

Check the boxes below in the Assets section: