I have a client who has recorded Rental Income and Expenses from property rented by a family member since 2019. In 2025 the taxpayer is allowing the family member to assume the mortgage of the property at the mortgage value. I have inquired of the taxpayer if an appraisal was done on the property to determine the current FMV. I believe the value is close to $463K but need the taxpayer to confirm this amount. I know the sale triggers both a capital gain on the sale and a reportable Gift Tax amount on Form 709. Here is what I do know. 

Capitalize Value as of 8/1/19 $299,120 

Depreciation Taken as of 12/31/24 $49,697

NBV is $249,423

Assumed Mortgage Value $153,062

What would be the reportable transactions on Form 4797? Does FMV impact the calculation? The taxpayer as seller on the closing statement reflects only the assumed mortgage of $153K being paid to the mortgage company and no other expenses. 

With regards to Gift Tax Form 709, is the amount of the reportable gift FMV once confirmed of $463K - Assumed Value of $153K - $38K allowable gift for daughter and son-in-law $272K? 

Does ProConnect handle the filing of Form 709 Gift Tax at the time of filing for 2025?

The closing statement is scheduled for 7/11/25 and this new client is asking for the tax implication of this transaction so I know that there will be another 6 months of income and expenses including depreciation on the property up until the sale as well but that should be a negligible amount.  

Thanks for any impute regarding this matter.