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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2283
Experience:  Certified Public Accountant
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My wife and I sold a second home, which was inherited, to

Customer Question

My wife and I sold a second home, which was inherited, to our son and daughter-in-law. The agreed upon price was $180,000(significantly below market value), and we would pay the closing costs. They needed a mortgage for the full amount, but the bank they used, said the only way they would lend them that amount was if the appraisal was at least $220,000, which is what they appraised it at. When we inherited the house, we paid inheritance tax on an appraisal of $140,000 in 2003. After we closed on the house with our son, my son's mortgage bank notified us that the reported sale amount sent to the IRS was for $220,000, because the $40,000 difference was a gift. How does this affect our taxes, and what amount do we owe taxeson? Thank you, ***** *****non
Submitted: 10 months ago.
Category: Tax
Expert:  Mark Taylor replied 10 months ago.

Hi, my name is Mark. I will be happy to help you. Was the property a rental?

Expert:  Mark Taylor replied 10 months ago.

You are correct. The $40,000 is a gift. Did you make any improvements?