Sold our second home to our son for $1.00. How do I handle this?

[Coleen3 · Accepted solution]

This counts as a gift, not a sale. You will need to fill out a Form 709. TurboTax doesn't handle it but you can download the form from the IRS. The first $15,000 of the gift is excluded. You will not have to pay a tax at this point, just let the IRS know about the gift. Your son's basis in the home will be what you paid for it plus any improvements made.

If the FMV is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. If you received a gift after 1976, increase your basis by the part of the gift tax paid on it that is due to the net increase in value of the gift. To figure out the net increase in value or for other information on gifts received before 1977, see Publication 551, Basis of Assets. Also, for figuring gain or loss, you must increase or decrease your basis by any required adjustments to basis while you held the property.

https://www.irs.gov/pub/irs-pdf/i709.pdf 

https://www.irs.gov/pub/irs-pdf/f709.pdf