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mseniw1
New Member

When selling a home received as a gift, Turbo Tax asks for the FMV and Donor's Cost Basis at the time of the gift. How do I input my cost basis at the time of the sale?

TurboTax computes the Capital Gains using the Donor's Cost Basis.  I have made improvements and need to compute the Capital Gains using my cost basis.  How is this done?
6 Replies
legordon1
Returning Member

When selling a home received as a gift, Turbo Tax asks for the FMV and Donor's Cost Basis at the time of the gift. How do I input my cost basis at the time of the sale?

I asked a similar question and the advice was to select Other rather than Gift.  Here is the link to my question and answer:

https://ttlc.intuit.com/questions/3221843

mseniw1
New Member

When selling a home received as a gift, Turbo Tax asks for the FMV and Donor's Cost Basis at the time of the gift. How do I input my cost basis at the time of the sale?

Thank you for the information.  I don't like the fact we have to check 'other' rather than 'gift'.  If you read the 'Learn More' adjacent to Donor's Cost Basis it alludes to adding your improvements to the donor's cost basis.  In fact, if you insert your gross proceeds from the 1099-S into the 'Net Proceeds' location, check the box and insert your sales expenses and insert your cost basis at the time of sale into the 'Donor's Cost Basis' location, Turbo Tax appears to compute the gain correctly.
legordon1
Returning Member

When selling a home received as a gift, Turbo Tax asks for the FMV and Donor's Cost Basis at the time of the gift. How do I input my cost basis at the time of the sale?

Do you know whether the method of acquisition actually gets reported to the irs?  I'm sure my capital gain is calculated properly but I do not have the fair market value on the date of the gift so picking Gift is problematic.  Do you know which form or schedule this appears on or whether it is just used internally to turbotax?
mseniw1
New Member

When selling a home received as a gift, Turbo Tax asks for the FMV and Donor's Cost Basis at the time of the gift. How do I input my cost basis at the time of the sale?

I don't know whether the method of acquisition gets reported to the IRS.  As far as FMV on the date of the gift, I simply called the town's tax assessor's office and they provided that value to me.  I don't know which IRS form or schedule this information appears on since I have not completed my taxes.  However, our house was gifted to both me and my sister, split 50-50.  She lives out of state so the closing attorney completed an IT-2663, Nonresident Real Property Estimated Income Tax Payment Form, to compute the tax she owed to the state. Nowhere on that form can you discern the property was gifted.  Also, I tried both "gift" and "other" in TurboTax and the results on the "You Have a Long Term Gain from This Sale" screen is identical using both methods (if I use the same value for cost basis in both).

I encourage you to  read IRS Publication 523, Selling Your Home.  I went through the worksheets to calculate the gain from our sale.  In short, if the donor's adjusted basis was less than or equal to the FMV at the time of the gift, your basis will depend on WHEN you received the home.  There are 2 short worksheets for homes received before 1977 or homes received in 1977 or later.  Both worksheets require the FMV of the property at the time of the gift.  The result from the worksheet is your cost basis at the time of the gift.   However, as you complete all the worksheets, you ADD improvements that were made to the home since the gift date to calculate your Total Basis at the time of the sale.

In my opinion, TurboTax should add an additional screen for gifted property to allow you to add improvements after the gift date.
mseniw1
New Member

When selling a home received as a gift, Turbo Tax asks for the FMV and Donor's Cost Basis at the time of the gift. How do I input my cost basis at the time of the sale?

I forgot to mention, IRS Publication 523 states "If you received Form 1099-S, start with the amount of real estate tax you actually paid in the year of sale.  Subtract the buyer's share of real estate tax as shown in box 5 of 1099-S.  The result is the amount you can deduct as an itemized deduction."  TurboTax allows you to add this additional real estate tax you paid.
legordon1
Returning Member

When selling a home received as a gift, Turbo Tax asks for the FMV and Donor's Cost Basis at the time of the gift. How do I input my cost basis at the time of the sale?

mseniw1, thank you so much for taking the time to share all the above information, you have been very helpful!
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