sharpcougar
Level 3
‎01-13-2023 04:42 PM

Follow up on earlier Question

Mom gifts daughter a house on 9/13/2021. House was purchased in 2017 for $157K encumbered by mortgage. 

Daughter was living in the house since 2017. Daughter sells the house 1 month after it was gifted for $225K. At closing mortgage of $41K was paid off and daughter received the rest of money. 

How does the $41 affect the basis? 

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sjrcpa
Level 15
‎01-13-2023 06:26 PM

It doesn't. I'm assuming Mom was liable for it.


The more I know the more I don’t know.
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Terry53029
Level 15
Level 15
‎01-14-2023 12:17 PM

Mortgage has no effect on basis. If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustment to basis while you held the property.

see pub 551.

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