- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
I have a client that had bought a home and updated the home then sold to his son. He original was going to rent the property but decided to sell. The property sold for 180,000 and on the doc it says due from Sellar at closing 131,213.18. Which includes closing cost, payoff of mortgage loan, gift of equity and seller credit. Is any of that an expense on the return for the seller. This is the first I have run into this so need some feed back.
thank you
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Don't confuse Money and Expense.
"Due From" is the money. You have to look at the closing statement and identify which things are Expense, the same as any other exercise.
For instance, Mortgage payment Principal is not Expense. Interest payment is expense. Final tax amounts would be expense. Commission to the selling broker, if one was used, is expense.
Don't yell at us; we're volunteers
Skylane
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Keep it simple. The sales price is 180k Everything else is adjustment to basis.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Your question is whether the "gift of equity" is included in the selling price. It shouldn't be, but did the escrow company report the $180K on Form 1099-S? If so, count it as a selling expense -- along with the "seller credit."
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
"Everything else is adjustment to basis"
Not the mortgage payoff; but yes to the improvements as well as original purchase.
"Your question is whether the "gift of equity" is included in the selling price."
Ooh, mind-reading...
Honestly, it would help us to have some details @kabbabkkg regarding the amount of that gift of equity. Are you aware of the Gift rules?
Example:
https://www.investopedia.com/terms/g/gift_of_equity.asp
Don't yell at us; we're volunteers
