Sale of Gifted House

[sharpcougar]

Never seen this before for hoping for some guidance.

Mom gifted daughter a house in in September 2021. The daughter was living in the house for 4 years when the house was gifted. In October of 2021 of same year, the daughter decided to sell the house for $220k.

Mom purchased the house in September 2017 for $157K

I know the daughter gets will show that basis date is 9/2017. Would this be considered sale of personal residence that the daughter lived in for 4 years? This is a strange one. Any guidance will be appreciated.

[IRonMaN · Accepted solution]

You have to have owned and lived in the residence for 2 out of the 5 years for gain exclusion.  Sounds like you only have met half of the equation

[BobKamman]

Obviously the mother didn't want to pay tax on the gain.  She probably already had a buyer.  Mothers who can afford to buy a house for their kid are usually in a higher tax bracket than the kid.  The mother has escaped a higher tax, but the daughter isn't "home safe" since her mother didn't trust her to own the place for the last two years.  

[hankinstax]

I agree with Bob.  The daughter must report gain on the home based on Mother's adjusted basis at the time of the gift.  The daughter cannot sustain a reportable loss on the sale.  The daughter is not eligible for "home sale exclusion".