Discussion:Gift Tax Return - Real Estate

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Discussion Forum Index --> Consumer Questions --> Gift Tax Return - Real Estate


Jlcl (talk|edits) said:

20 March 2007
Parents sold real estate to daughter at below FMV. House is appraised at $700k and parents sold for $500k (enough for the home sale exclusion for married couple).

For the gift tax return, they are supposed to report $200k as taxable gift.

For Schedule A under Form 709, it asked for donor's basis which is $250k, value of gift which is $700k, and the net transferrable amount is $450k. Where would you reflect the home sale exclusion? Under Part 4 Taxable Gift Reconciliation as:

Value of Gift of Donor: $700k Deductions: (Exclusions attributable to gifts) $500k?? Taxable Gift: $200k

Which line on the gift tax return do you put the home sale exclusion of $500k?

Mastill (talk|edits) said:

20 March 2007
Why not sell to daughter for 750K(250k basis and 500k exclusion), report sale on 1040, non taxable. Then prepare gift return forgiving debt.

On 709 report forgiveness on debt 250k. exclude 12k from mom and dad, 24k each if daugter married, then reportable gift of either 226k or 202k.

Then daughter has basis of 750k in house.

Hadlin (talk|edits) said:

20 March 2007
or to take mastill further.

have mom and dad sell to daughter and gift 24k each year until whole mortgage is forgiven.

Kevinh5 (talk|edits) said:

20 March 2007
because it has already been done last year now she must report it the way it happened

Jlcl (talk|edits) said:

21 March 2007
Correct. The parents just need to report what happened in 2006. So, $200k would be considered a taxable gift since the property was appraised at $700k and sold to daughter for $500k. I'm just not sure how to fill out form 709.

For Schedule A under Form 709, it asked for donor's basis which is $250k (or should donor's basis be $500k to reflect the $200k gift), value of gift which is $700k, and the net transferrable amount is $450k. Where would you reflect the home sale exclusion? Under Part 4 Taxable Gift Reconciliation as:

Value of Gift of Donor: $700k Deductions: (Exclusions attributable to gifts) $500k?? Taxable Gift: $200k

Kevinh5 (talk|edits) said:

21 March 2007
gift is 200K, less 12k/recipient exclusion = 188 taxable against donor's $1 million lifetime amount.

Jlcl (talk|edits) said:

21 March 2007
for donor's basis on the form - do i put $500k to get to a $200k taxable gift or the real donor's basis $250k?

FrankF (talk|edits) said:

2007-03-21
I would add a the full, detailed calculation as an attachment to the Form 709 (not trying to stuff it all on the schedule).

Jlcl (talk|edits) said:

22 March 2007
I agree. A detailed schedule is the best way to explain the gift.

For the FMV of the gift - I believe it should be $200k ($700k appraised FMV of house - $500k sales price to daughter)

How do you calculate the donor's basis of the $200k gift - Take $200k/$700k x $250k (true basis of the house? Or Take $200k/$500k x $250k?

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