I quit claimed a rental to property to my daughter who lived in it. How do I note this on my taxes?

[Bsch4477]

Complete form 709 gift tax and mail to the IRS. TurboTax does not support that form. 

[Carl]

Work through each individual asset one at a time, in the Assets/Depreciation section. For each asset listed, indicate that "I stopped using this asset in 2022" and continue. When you come to the "Special Handling Required?" screen, read that screen so you understand why I am telling you to select YES. Then select YES.

Also, since I'm sure the value of the property you gifted to her was more than $16,000, you are required to report the gift to the IRS by filing IRS Form 709-Gift Tax Return. If the gift was less than $11,6M then you will *NOT* pay any taxes for that gift. BUt you are still required by law to report this to the IRS.

The TurboTax program does not support the IRS Form 709-Gift Tax Return. But you can get the form at https://www.irs.gov/pub/irs-pdf/f709.pdf. Just file it out and mail it to the address in the instructions for the form 709. Instructions are located at https://www.irs.gov/pub/irs-pdf/i709.pdf

For the recipient of your gift, their cost basis is your cost basis, minus the total amount of depreciation you have already taken. This will matter if they later sell the property, or make it a rental of their own.

While you the giver will pay no "gift tax" on the gift, you also do not get any deduction for your gift. When you gifted the property, you also gifted your cost basis and the depreciation to the recipient of your gift.

[amwsugartree]

Thank you Carl for your advice. That Form 709 looks like an alien language to me, but I will do my best. I appreciate your time to answer my question.

[gr3849]

Carl: I saw your great explanation about the quit claimed property as a gift and a F709 need to be filed separately. I have a similar situation. My one was handled in a new Grant Deed during a refinance when the owners changed from Me/Daughter/Son to Daughter/Son. Do I treat this just like QuitClaim Deed? Also I suppose to file the F709 in 2022 since this transaction happened in the Dec of 2021. I am two years late. Will there be a consequence since I am late? The ownership transfer should be 1/3 of the equity, which is much less than the gift limit.

Thank You

Jerry 

[gr3849]

By gift limit, I mean 11.5M.

Jerry

[DianeW777]

Yes, you should file your gift tax return (Form 709) if the gift to each of your children was $15,000 or more for each child.  If you are married and the house is in both names then you would be eligible for gift splitting and each child could receive $15,000 from each of you before a gift tax return would be required. The date of the gift does matter and it appears it was 2021.  If however it wasn't finalized until 2022, then the gift amount for each child is $16,000 for 2022.

• It would be best if you used a professional for your gift tax return, however review the information in the link below:
  • Gift Tax Made Simple
  • IRS Gift Tax FAQs
  • IRS Prior Year Forms and Instructions

The basic difference between a 'grant deed' and a 'quitclaim deed' is that there is usually more protection for the buyer in a 'grant deed'. An example would be if the buyer finds out later the property was not free and clear, however it is clear your attorney provided you the best guidance in your situation.

It would seem reasonable that your cost of the property, gift to your children, would be greater than the filing requirement.  TurboTax does not provide software for a gift tax return.

@gr3849