how is the gift of equity taxed on sale?

[WITAXLADY]

Parents sold house to son with a $35,000 gift of Equity -

so first son is single so they triggered a 709.. over the 2 x $17,000 gift tax allowed..

 

And how in the sale is the $35,000 treated?

It seems it has to be added to the sale price Full price ?

Sale of $127,000 - gift of $35,000  = loan of $92,000

But to the parents/sellers - it would be the $127,000?

 

Thankyou,

Darlene

[WITAXLADY]

by the way - the 1099-S states the $92,000 - isn't that incorrect?  but if used - it would not flag the gift of equity?

D

[jklcpa]

What was the FMV of the home as determined by appraisal?  It may be that parents sold at below FMV, and if so, that will affect the answer here.

[WITAXLADY]

I think it is $127,0000