Gift of equity

Forum|Forum|3 years ago
March 6, 2023
4 replies
21 views

Client sold property to son. They gave a gift of equity ($66250.00) to son who used this gift as a down payment to purchase home. Is there a tax liability to son or parents for this gift.?

ProSeries Basic

This topic has been closed for replies.

Just-Lisa-Now-

Intuit Community Champion

Dad will need to file a 709 gift tax return.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

IRonMaN

Level 15

Nope. Gifts aren't taxable to the kid opening up the present from mom and dad.

Slava Ukraini!

IRonMaN

Level 15

And mom will also want to file that gift tax return along with dad.

Slava Ukraini!

T

TaxGuyBill

Level 15

Be aware that for purposes of reporting the sale price and for the son's Basis in the property, in most cases the amount you use is the cost AFTER the so-called "gift of equity". So if the contract says $330,000 with a "gift of equity" of $66,000, the actual sales price for tax purposes is $264,000 (and that is the Basis of the son too).

In the event that $264,000 is lower than the parents' Basis or if Gift Tax was paid, that can alter things, but that is not common.

J

jeffmcpa2010

Level 10

Some questions from paid tax preparers make me run for rcooleys fireball...

IRonMaN

Level 15

You should have been visiting here for as long as I have --------------------- you would never leave his Fireball.😲

Slava Ukraini!

Sign up

Login with SSO

Let's get you signed in

Login with SSO