Does a Gift of Equity lesson Capital Gains?
Person A owns rental property which was appraised at $300K and wishes to sell to a relative, Person B. Person A's cost basis is $100K. The on paper sales price will be $300K and a gift of equity in the amount of $100K will be given to Person B in order to avoid PMI.
Would Person A only have to pay capital gains on the $100K realized gains or the $200K on paper gains?
Person A owns rental property which was appraised at $300K and wishes to sell to a relative, Person B. Person A's cost basis is $100K. The on paper sales price will be $300K and a gift of equity in the amount of $100K will be given to Person B in order to avoid PMI.
Would Person A only have to pay capital gains on the $100K realized gains or the $200K on paper gains?