My father did a quit claim deed of his property to me and my brother. he still lives there, we do not plan to ever sell it. what do we have to report to irs?

[pjlutgen]

dad is staying there and we ard not selling it. we both plan on building a home on the land when he is gone

[Phillip1 · Accepted solution]

As far as income goes, there is nothing taxable to you in the quitclaim of your father’s property. This would be considered a gift. You and your brother have a gift basis in the property that is equal to your father’s basis in the property (the price he paid for the property plus the cost of any improvements or additions). When you build the home, you will add the cost of the home to your gift basis.

If you and your brother paid the mortgage or the property tax on the property this year, you may be able to take a deduction for your portion of those expenses.