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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16580
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I am in the process of purchasing property from my parents

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I am in the process of purchasing property from my parents who were originally gifted the property from my grandparents. When we last talked to our CPA about this transaction he mentioned that they would potentially have tax implications based on the cost basis of when they were gifted the property. Exactly what does this mean?
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thanks for your question. Your parents basis in the property is the same as the basis from who they received the property from. They would have a gain between that value and your purchase price. If they lived there 2 out of the last 5 years they can exclude 500k from gains. Otherwise they owe capital gains tax.

Please let me know If you need anything additional. Otherwise rate my response excellent

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