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How should I treat a gift of equity that shows up on a closing statement?
A client gifted equity to his granddaughter. I believe I need to do a gift tax return for that amount, but can I then subtract the gift from the sale?
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Yes.
For example, if the paperwork shows a $200,000 sale price with a $50,000 Gift of Equity, in reality the sale price was only $150,000. So use $150,000 as the sale price (if there is a 1099-S, you might need to get creative), and the Gift Tax return would show a $50,000 gift.
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