Selling/gifting home to daughter who then buys mobile home at lesser value for me

[simidave]

Both me and daughter need help on how to report this.

Market value of my home was 670,000. I deeded it over to my daughter (and husband). 

She then purchased a mobile home for 333,000 for me on a non-owned lot that rents the space to me.

I know I can't take a loss, but is the "loss" of 237,000 (670,000-333,000) to be reported as a gift?

Is her basis in the home 670,000 or 333,000?

One last factor/question: As part of my compensation in the deal, she pays 700/mo toward my lot rental. Does that count as a gift for her to track?

[Opus 17]

Go see an accountant.  Whatever you are trying to do, you probably screwed up and did in the worst way possible.

1. Gift of home to daughter--gift tax requirement

When you gifted the home to your daughter, you must file a gift tax form 709.  No tax is owed as long as your lifetime gifts and estate are less than $11 million, but the report is required.  The value of the gift is the fair market value at the time.

2. Gift of home to daughter -- subsequent sale

You didn't say your daughter sold the home.  If and when she does or did, her capital gain or loss has nothing to do with the market value.  When you gifted her the home you gifted her your cost basis as well.  Her gain or loss is the difference between the purchase price and selling price.  Suppose you bought the home for $100,000 and she sold it for $300,000.  She could have a taxable gain of $200,000, depending on whether she lived in the home for at least 2 years after you gave it to her and before she sold it.  

Your cost basis on the gifted home is what you paid for it, plus and minus adjustments for improvements and business use.  There is also an adjustment if you co-owned the home with a spouse who died before you, which is different depending on which state you lived in.  You may need to dig through old records to determine the basis.  The higher the basis you can prove with reliable records, the lower the daughters' capital gains tax will be. 

3. Daughter purchased a mobile home

Why do you think there is a loss?  No one has a loss.  There are three completely separate transactions here.  1. You gave away a house.  2. Daughter might have sold the house (you don't say).  3. Daughter bought a mobile home. If daughter sold the house, she probably has a gain, depending on when you bought the house.  Even if she has a loss, the amount of the loss has nothing to do with the mobile home.  The rules about rolling one home into the other were repealed 15 or 20 years ago and replaced with the exclusion rule. Daughter's basis in the new mobile home is whatever she paid, but that does not exempt her from paying gains tax on the sale of the gifted house.  

4. Mobil home is on a rented lot, and daughter pays rent to you instead of directly to the landlord.

You are either getting a gift or you are subleasing the lot and have rental income.  Gift is more likely and easier to deal with and the annual amount is less than the requirement to file a gift tax return.  But why doesn't she pay the landlord directly?

Go see  professional please. 

[simidave]

Let me try to be more clear. These transactions are complete and I need to know how to report. 

My daughter had no home so I deeded her mine in exchange for her agreeing to  buy me the moble home for $333,000 (no mortgage) and paying $700/mo to me toward the lot rent.

The FMV of my old home was $670,000. I'll have to research to see what the cost basis was if needed.

This is obviously a good deal for her because I wanted to help her out. She's not selling the house but for future reference I wanted to know her basis in my old home. 

Thanks again. 

[DaveF1006]

if you are gifting the home to her, you will need to know the original cost basis of your home in case if she does sell it. Original cost basis is what you originally paid for it, improvements, and settlement costs when you purchased the home.

[simidave]

In essence she paid me $333,000 for my home by paying that to purchase my mobile home. 

That's why I thought the 670,00 minus 333,000 might be the gift portion.

[Opus 17 · Accepted solution]

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@simidave wrote:

In essence she paid me $333,000 for my home by paying that to purchase my mobile home. 

That's why I thought the 670,00 minus 333,000 might be the gift portion.

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If you want to treat it that way you will need professional advice.  I see it as two separate gifts.

If two separate gifts, her cost basis for the home is your cost basis.  You should help her document that now and she should save that paperwork as long as she owns the home plus for 6 years after she sells.  That will help her minimize her capital gains tax owed.

Then her gift to you of a paid-up mobile home means that your cost basis in the home is whatever her cost basis was.  Again, you need to document that for your own tax records.

Treating it as a sale could mean that her cost basis in her new home is $333,000 plus you gave her a gift of the difference.  Whether that is better or worse for you both in the long run is something I can't suggest an answer to.  The fact that it was a transfer to a related person may also affect the basis determination.  And depending on how you worded the various transfer deeds, you might not be allowed to claim it that way at all.  Most people aren't audited but even so, I would consider running this past an expert.