I am selling a second home (no longer my homestead) to stepdaughter and son-in-law. I bought the property in 1986, basis should be $130,00-140,000 when everything is added up. The mortgage broker has suggested a gift of equity for financing purposes, with a sales price of $210,000 and gift of $30,000 for $180,000 to enable them to show downpayment/equity for their mortgage.
I understand the closing company will issue the 1099-s for $210,000.
Will capital gains be based on the $210,000 or the $180,000? I read conflicting statements on the internet. It seems to me it should be the $180,000 since the buyer's basis will be $180,000. The gift tax return is not a concern. I do not want to pay capital gains tax on the $30,000 since I will not get it or ever see it.
Thanks for your help.
I understand the closing company will issue the 1099-s for $210,000.
Will capital gains be based on the $210,000 or the $180,000? I read conflicting statements on the internet. It seems to me it should be the $180,000 since the buyer's basis will be $180,000. The gift tax return is not a concern. I do not want to pay capital gains tax on the $30,000 since I will not get it or ever see it.
Thanks for your help.