sold rental to son for what I purchased for it (200,000). Would like to gift he and his wife the difference of what I owed on my mortgage ($150,000).how do I report this. I have a 1099S stating the sale of the house was for $200,000.

[Carl]

Apparently, I must be missing something here. I don't see any "gift" here. But I do see a taxable gain to you, that you have to pay taxes on.

While you owned the property, you were required to depreciate that property for every year it was classified as a rental. When you sold the property (regardless of who you sold it to) you were required to recapture that depreciation and pay taxes on it. So you actually have a taxable gain on the sale.

Your proceeds from the sale were used to pay off the existing mortgage of $150K, leaving you with $50K cash.

[Marww]

We gifted our son $20,000. and daughter in law $20,000. towards the cost of the home....the actual money that changed hands for the sale was less then 10,000. after the mortgage was paid.  IS there a way to show the gift was not a financial gain to us? 

Thank you

[Carl]

IS there a way to show the gift was not a financial gain to us?

Gifts are neither a gain or a loss to the giver of said gift. and does not get reported anywhere on the giver's tax return. But if the gift given to any one individual, by any one individual exceeds $15K in a tax year, then the giver is required to report that gift on IRS Form 709 - Gift Tax Return. Understand that you will not pay taxes on the gift. You're just meeting a reporting requirement is all.

So with a gift of $40,000 I don't see a reporting requirement at all.

father gifted son $10K

Father gifted daughter-in-law $10K

Mather gifted son $10K

Mother gifted daughter in law $10K

Also take note that the recipient of a gift has no reporting requirement at all, and the gift is not included on the recipient's tax return.