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Posts: 1
Reply with quote  #1 
My client bought their home from a parent (02-20-15).  The value of the home was $210,000 (appraised) on purchase date.  Contract Sales Price on HUD1 is $210,000.  Seller gave a "Gift of Equity" to my client equal to $44,000.  My client financed the balance of $166,000.  My client now wants to sell that home (only lived in it 4 months. I realize this will be a taxable transaction. hasn't lived in it 2 of the last 5).  My question is what is my clients basis in the home (not concerned with gift tax issues. Parents basis was more than the $44000 Gift of Equity) and because they have lived in it only 4 months does that create any problems?

Would my clients basis be $210,000 (plus improvements etc) or $166,000 (plus improvements etc)?   My opinion is the gift is $44K, and the parents basis is more than $44K thus the gift will be considered as basis to my client. ???  Would some kind of allocation  of seller basis to FMV apply ?????

Thanks in advance for your opinions.
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