Tax Basis When Selling Gift Property
20 years ago I received a portion of recreational land as a gift from a relative. Now I am ready to sell. The property has greatly appreciated. What are the tax implications? How do I compute cost basis?
Reply: Because you received a gift, your basis in the property for tax purposes is a "carryover" basis from the grantor. Essentially, whatever the grantor paid for the property, any improvements, and any gift taxes paid would increase your basis. Since it is land only, there would not have been depreciation. You would be subject to Capital Gains Tax rates and possibly the Alternative Minimum Tax.