equity gift/fair market value/confusion

[sledbed]

What is the name of your state?connecticut. help is badly needed.

i will be buying a house from my aunt. she inherited the house from her mother approx 4 years ago. during this 4 year period i have been living in the house paying property taxes, insurance, utilities & repairs. my aunt has never lived in the house or had it rented.

fair market value/sell price is 170,000. my aunts wants 120,000 at close. she will gift me 50,000. her basis is 45,000.
i was planning on a 120,000 mortgage added to the gift of 50 = 170.

what is my aunts capital gain based - 170,000 or 120,000?
if the sale price is changed to 120,000 - well below market value - does her capital gains liability change? is she required to declare the fmv when figuring gains?

any pros or knowledgeable members that can help me out. thanks to all that reply.

sledbed

[Snipes5]

You say your Aunt's basis is $45,000. So the house has appreciated in value 400% in the past four years?

Basis is FMV on the date of death, for inheritance. Check on that first, $45,000 doesn't sound right.

Snipes

[abezon]

I suspect her basis is about $150,000. She will not have any gain, since she's selling for less than that. Because she's selling for less than fair merket value, she cannot claim any kind of loss.

Your basis will be whatever her basis was (the $120,000 you pay plus her remaining basis in the gifted $50,000 of equity). She will need to file a gift tax return.

[sledbed]

thanks snipes & abezon for you quick replies.

i've got more details on my aunt's basis. the house was built in 1970 and my grandmother lived there until her passing 4 years ago. in 1993 the house was transfered to my aunt via deed. no money changed hands, just the deed was signed over.

my aunt has been advised that her basis is the same as my grandmother's because the house was transfered in 93 and not through inheritance after my grandmother passed on in 2001.

my aunt has also been told to sell the house for 120,000 with no gift. in this situation she believes her gain liability is based on the 120 sell price.

is she required to pay gains based on the fmv(170) even though she sells for 120 with no gift?

what is her gains based on - 170 or 120 - if she sells for 170 and gifts me 50?

what is my aunt's basis? possibly the fmv in 1993?

lots of q's for sure but i'm hoping for more help. thank again to all.

sledbed

[abezon]

Your aunt's basis is the same as her mother's basis. Her gain is based on the actual sale price.