Rental Property Gifted To Daughter

[GTS1101]

I have a client this year who have gave their rental property as a gift to their daughter in the middle of 2006. The daughter has been renting the house since 2003. They did a quit claim deed to transfer title and the daughter refinanced the loan in her name. How would I treat the rental property? Would it be treated as a sale and sold at the same price as bought since it was a gift and the basis was transfered to the daughter and if that is the case then would they still have to recoup depreciation and pay tax on the depreciation? Or would I just stop depreciation as of the transfer date and no longer claim it? The property was first rented out in 2003.

Thanks!

GTS1101

[Kram BergGold]

gift

From Jan until the date of the gift you would report rental income to the parents. Then you file a gift tax return for the parents based on the FMV of the house on the date of the gift. Then tell the daughter what her cost basis is, the adjusted basis of the house. And you are done.