Please accept my thanks in advance. I have a client who is considering selling a 2nd residence to a close relative with a gift of equity. Their adjusted basis is approximately $130,000 and the FMV according to the realtor is $250,000. The goal is to just get the $130,000 basis back but wants to be mindful of capital gain tax. They way I read pub 523 - the buyer will retain the cost basis of the seller thereby increasing the chance the new buyer will pay capital gain in the future. What is not clear - does the seller list the proceeds received as ($130,000) or do they list the the total price including the gift of equity ($250,00)? I read it both ways and now I am not sure. Thanks again.
Deb