Form 709 Schedule A Column e Donor's Adj Basis of Gift

[TracyJean]

Hi there,

I sold my home 8/30/2024 to my son for less than market value.

Market value was  $455,000 (Appraisal done 8/2/2024)

He purchased for $386,000 and escrow closed on 8/30/2024.

He got a mortgage for $300,000, with down payment equity of $86,000.

Would the Donor's Adj Basis of Gift (e) be $300,000 and the Value on Date of Gift (g) be$155,000 ( this is the total equity gift which includes the down payment equity gift of $86,000.

or would it be $455,000?

Also, my original basis in the house which I bought in 2000 was $171,020. Should this go on (e) instead ? Just confused on how to arrive at the basis!

Also, if you put $455,000 for (g) this will get put on Schedule A Part 4 line 1 for the total value of gift which is not accurate. Of course it doesn't really matter since it is way below the $ 13.99 million lifetime gift tax exclusion. Thanks in advance!

[Hi Palms]

They need to know the adjusted basis of the gift for tax purposes when the donee eventually sells the property.

They also need to know the fair market value of the property to determine the amount of the gift.

You had a part gift/part sale; you sold the property for less than it's fair market value to a relative. 

Your son paid $386,000 when the home had a FMV of $455,000 so the amount of the gift was ~$69,000 and the basis would be $386,000 (which is the greater of your adjusted basis and what your son paid).

Note that if you are married, you could give your son up to $36,000 in 2024 without even be required to a file a gift tax return. Also, if your son is married that figure would double to $72,000 ($36k to your son and $36k to his spouse). 

[TracyJean]

Thank you🙂