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Hi all,
I have a question concerning the value of a home that I gifted. The house is now paid off. Do I use the value of the loan that was made minus depreciation that I have taken on my taxes in previous years to determine the "value" for tax purposes or do I have to use fair market value? The reason is that if I use the loan cost minus depreciation, then, between my wife and I doing a joint gift to both the husband and wife who are receiving the house, it will not pass the $10,000 per person amount for our taxes. Otherwise, using fair market value, we will be well over the $10,000 per person limit.
So far I have not been able to find anything out about this specific case so any help is appreciated. Thanks,
Carson
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No. of Recommendations: 1
I have a question concerning the value of a home that I gifted. The house is now paid off. Do I use the value of the loan that was made minus depreciation that I have taken on my taxes in previous years to determine the "value" for tax purposes or do I have to use fair market value?

For purposes of gift taxes, you use the FMV at the date of the gift.

The recipient of the gift will need to know your tax basis, that is, your original purchase price plus improvements and any depreciation taken. The amount of the loans on the property in the past is not important. They "step into your shoes" so to speak, for income tax purposes. They will need this information (and the FMV) for their income taxes if they ever sell the house or are eligible to claim depreciation on it.

--Peter
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