Cost basis for home after gift of equity - Capital Gains

[nZenitram]

Mortgage: $150k

Gift of equity: $120k

Total: $270k

Sold home last week for $300k

Total cash in hand after close: $126k

In short, paid off $150k mortgage, pocketed $126k, for a total net of $276k.

Do I owe capital gains taxes on the $276k - $270k = $6k gains (gift of equity increases cost basis)

Or do I owe taxes not including the gift of equity: $276k - $150k = $126k gains.

Thank you.

[Critter-3]

All those figures are nice but you are missing the only one that really matters ... what was the giver's basis in the home when it was gifted ?   And did they file a gift tax return  and actually pay any gift tax?

[nZenitram]

The home sold for the Mortgage + Gift of Equity. $270k.

[Critter-3]

Again immaterial information for the sale ... you need to know the GIVER'S adjusted basis.  What did they pay for the property and did they make any improvements until they gifted it to you and was it used as a rental where depreciation was taken ?  

[nZenitram]

It was their primary residence for 35 years, built by the husband.

[nZenitram]

Ahh crap, I understand the vagueness here.

I bought the house for $150k plus the gift of equity, and then sold it later.

I am the buyer and the seller.

I apologize.

[Critter-3]

Ok ... so you bought the home for less than what is was worth since they gifted you their equity in the home. 

So your basis is the purchase price + the cost to buy + the cost to sell + any improvements you made during the years you owned the property... this is your cost basis.  The mortgage payoff is immaterial. 

The selling price  -  your cost basis = the profit reported on the Sch D.