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Hi. Great Question. You can gift it with no taxes to you - since it is over $14,000, you will have to fill out a gift tax return, but will have not tax due, since it is under the 5+ million of estate tax lifetime exclusion.
You can also take the 250k/500k gains exclusion if you can prove ownership and use of home.
Ownership and use of that home does not need to occur at the same time. As long as you have at least two years of ownership and two years of use (you occupied the house) during the five years before you sell the home - also, the ownership and use can occur at different times.
One question - have you been filing a Schedule E or taking the rent as other income on the 1040?
From this, you received a net of 352k, which was under the 370k - since it was a rental property, you would have to add back the depreciation you had taken on the property via your prior Schedule E's - if the net of this calculation is a gain, subtract any closing costs or other sales costs you had from it.
- the 88k would be part of the lifetime estate exclusion - a gift tax return would be filed, since it is over 14k (28k, if jointly).
- the net would either be classified as a capital gains or loss for the year of sale (adding back any depreciation expense taken/less selling/closing expenses)
Let me know if you have any questions.
California has a common law property, but does not pertain to recognizing the capital gain or loss. Remember to add back the closing costs and any selling costs you pay for - this may lower or write off the gain.
* community property
Community property relates to ownership rules - it relates to for example if a spouse dies and there is a capital loss carryover on the joint return - the wife or husband can take 50% of that loss off on their future returns - it is a legal concept that overlaps with tax. I was answering anything related to California. Sorry for the confusion.