F-593e help!!!

[mdelgado10]

My parents are selling/transferring/gifting me their second home. I need help with F593-E. The sales price is $260k. There is $60k down payment which is considered a gift. It's coming out of no one's pocket. The new mortgage will be $200k.The house is valued at $350k. It was purchased for $85k on July 1987. The current mortgage is $105k.My parents are cashing out $90k.

We are in the final stages of closing. I will have immediate equity of $150k. It wasn't meant to be this way but its how it came out. I plan on giving my parents $30k in six months if I can refinance or in two years when I sell. I believe my parents are taking a loss on the home since the equity is $245k. Do you agree there should be no state withholding on my parent's side for F593-E? If so can you help me fill out the form?

[Uncle Sam]

First - what exactly is a F-593-e?

Second - your whole story doesn't make sense with the sloppy set of facts you provided. Where are the values you claim coming from - any reliable source?

[TaxGuyBill]

If they are receiving $200,000 now and $30,000 in the future, the sales price for income tax purposes is $230,000.

If it was purchased for $85,000, the preliminary gain would be $145,000. I say "preliminary", because the $85,000 Basis would likely have changed. For example, it may have been reduced because of any depreciation that was eligible to be claimed or by the 'rollover' provision for Principal Residences before 1997(?). The $85,000 Basis would be increased by any improvements. Any selling fees would reduce the gain. Those are on Line 5-11 of that form.

https://www.ftb.ca.gov/forms/2018/18_593e.pdf.

[Gene V]

My parents are selling/transferring/gifting me their second home. I need help with F593-E. The sales price is $260k. There is $60k down payment which is considered a gift. It's coming out of no one's pocket. The new mortgage will be $200k.The house is valued at $350k. It was purchased for $85k on July 1987. The current mortgage is $105k.My parents are cashing out $90k.

We are in the final stages of closing. I will have immediate equity of $150k. It wasn't meant to be this way but its how it came out. I plan on giving my parents $30k in six months if I can refinance or in two years when I sell. I believe my parents are taking a loss on the home since the equity is $245k. Do you agree there should be no state withholding on my parent's side for F593-E? If so can you help me fill out the form?

My thoughts on just one aspect of the sale, If the FMV of the house is $350,000, then since they are selling the house to a related party, they would use the FMV as sale price and the Gift of Equity would be $150,000 not $60,000. It been awhile since I done a related party sales, I could be wrong, however, I don't see a lost, if there was a lost, the parent couldn't show a loss on their tax return (sale to related party rule)