Taxes for gifting property gains

[abruc]

If in1983 my dad purchased ($1921) a leased lot and built a cabin, added utilities, transfered it to me in 1992 (cabin as 2nd home) valued @ $21200 / land $10400 (my dad died in1993) and I added a porch, shed, new septic, etc and sold the cabin in 2018 (valued @ $61600/ land $105900, would my basis be ($1921) plus all improvements?

[Carl]

YES.

[abruc]

OK. So when he transfered the cabin/lease to me in 1992 his basis would have been $1921 + improvements, etc.,  Would (or could) the improvement costs be the cabin/land 1992 FMV  $21200 / 10400? 

Thanks.

[Carl]

This is not difficult. When gifting something, the cost basis of the giver is also gifted.

When you sell the property, the FMV does not play into anything at all.  So you can throw that number out. Your cost basis is what you paid for the property when originally purchased, (in your case, $1921) plus the cost of any and all property improvements done since that property was originally purchased for $1921 by your father. It does not matter who did or who paid for the property improvement. It does not matter if the property improvement was done before your dad gifted it to you, or after.

[abruc]

OK. My basis is $1921 plus my dad's improvements and subsequently my improvements. 

[Carl]

Based on all the information you have provided, you are correct.

Reporting the sale in TurboTax should be easy, provided that since your dad originally purchased the property, the property was never rented out at any time (not even a room rented out) and at no time was a home office deduction claimed on the property during the entire period of ownership since your dad purchased it.

Basically, if you report this in the "sale of home (gain or loss) section, you don't need to list out each and every little property improvement individually. You can just total up the original purchase price and all property improvements and use that bottom line figure as your cost basis.

I am assuming that this property was used as a 2nd home or a vacation home. Therefore that's where I would expect this sale to be reported. But do pay attention to detail when working it through that section. Depending on your specific situation, you "may" be told by the program that the correct place to report this sale is in the Investments section. If that occurs and you need help reporting it in the Investments section, then by all means post back here and I'll do my best to help with that.

[abruc]

Thanks for your help. (selling gifted property).  Question: For 30+ years I paid a cabin owners' "road association" fee  to maintain/improve the access road  to our individual driveways. The access road was not on our properties. Is this fee a reportable "improvement?"