I gifted rental property I owned that was destroye...
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New Member

I gifted rental property I owned that was destroyed by mold to the tenant. How do I account for this loss and/or gift?

Without counting this, I take the standard deduction.
The cost of mitigation exceeded the value.  However, it retained some value on tax records.  Knowing what basis should be used to determine the loss/gift would also be helpful.
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Level 15

I gifted rental property I owned that was destroyed by mold to the tenant. How do I account for this loss and/or gift?

if you really did gift the property you are not entitled to a tax deduction.  see a real estate lawyer who could clarify your situation. 

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Level 15

I gifted rental property I owned that was destroyed by mold to the tenant. How do I account for this loss and/or gift?

A gift is not deductible on any tax return. Ever. You have no loss to claim. Not a penny. Simply work through the Assets/Depreciation section and for each individual asset listed select the option for "I stopped using this asset in 2019". Then on the "Special handling required?" screen select YES and finish working it through. That does it. 2019 will be the last tax year you will report this property on your tax return. If it gets imported to your 2020 tax return next year, you can delete it from your 2020 return *NEXT* *YEAR*.

If the value of your gift was more than $15,000 (and I"m sure it was) then you are required by federal law to report the gift to the IRS on IRS Form 709 - Gift Tax Return. *YOU* *WILL* *NOT* *PAY* *TAXES* on the gift. But you are required to report it.

Take note that the form 709 has absolutely nothing to do with any tax return in any way, shape, form or fashion. It's completely separate. The form 709 is not included in any version of TurboTax. You can get the blank form at https://www.irs.gov/pub/irs-pdf/f709.pdf and the instructions at https://www.irs.gov/pub/irs-dft/i709--dft.pdf.  Mailing address for the form is included in the instructions. *DO* *NOT* mail the form with your tax return. It "DOES NOT" get mailed to the same location as your tax return.

 

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Level 6

I gifted rental property I owned that was destroyed by mold to the tenant. How do I account for this loss and/or gift?

This is a situation that you probably should NOT attempt yourself ... seek local professional assistance to correctly retire the property and file the gift tax return. 

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Level 15

I gifted rental property I owned that was destroyed by mold to the tenant. How do I account for this loss and/or gift?

A few other things I just recalled too. When you gifted the property, you also gifted your original cost basis, *AND* all of your carry over losses. So you gave away much more than you may be aware of.

Overall, you might have been better off to let the county condemn the property and then sell it for whatever you could get for it. Then your loss on the sale of business property along with your carry over losses would have been deductible from your other ordinary income. Now you don't have that.

 

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Level 15

I gifted rental property I owned that was destroyed by mold to the tenant. How do I account for this loss and/or gift?

As others have said, you need professional help (tax/real estate lawyer or CPA).

 

That said, I'm of the opinion that you do have a capital loss.  It's the difference between your cost basis and the value of the property when you disposed of it.   That is,  you disposed of the property for it's value and then you made a gift of equity,  for that value, to the tenant.  If the tenant is a related party, the capital loss would not be allowed and the tenant's cost basis will be different.  

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