Sale of gifted foreign property - incomplete gift?

AMC6 — Sat, 22 Nov 2025 03:35:20 GMT

Hello!

I am hoping someone can help me with this question (but I am also trying to get an appt with a CPA).

In 2021, my parents (non-US residents, non-citizens) gifted me (US citizen) a rental apartment that was rented out. In 2022, they both passed away. I was finally able to sell it in 2025.

Is there any way this could be considered an "incomplete gift" that "converted" into an inheritance at their time of death 1.5 years later? I am asking because then I could use the stepped-up basis.

My parents managed the apartment, dealt with the renter who did not know that ownership changed, they kept the rent for 1.5 and reported the rental income on their foreign tax return. They paid bills related to the rental. I did not have access to the rental bank account; in fact, I didn't have an account over there until after they passed away. My parents, however, did not have legal provisions in the transfer deed such usufruct or others. I have read that the IRS may consider that rental was still treated like my parents owned it... or is that wishful thinking?

Thank you very much for your input!

Re: Sale of gifted foreign property - incomplete gift?

AmeliesUncle — Sat, 22 Nov 2025 22:47:33 GMT

If your parents maintained full control, authority and essentially treated it as they still owned the property, but merely changed the title to your name, at first glance it seems to be a "Life Estate".

*IF* that is the case, you would receive the full Step-up in Basis.

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Sale of gifted foreign property - incomplete gift?

Re: Sale of gifted foreign property - incomplete gift?