Rental Title Transfrd To Daughter

[GTS1101]

I have a client who had a daughter who was married that could not get a home on her own because of credit problems. My clients the mom and dad bought the house in their own names and were both on title. They then rented it out to their daughter at a fair rental value and had them keep up the property so that they could claim it as a rental property on their tax return. Now a few years later they have transferred the property to their daughter and the daughter has refinanced the property in her own name. I filed a gift tax return for the mom gifting the home to her daughter. My client says she did not give it to her as a gift she says she just transferred it at no gain or loss. I believe it is a gift. I need some guidance. My client says because she had a mortgage on the loan it is not a gift and that she just transferred at no gain or loss that she just transferred her basis to her daughter.

Thanks!

GTS1101

[veritas]

It sounds like they sold it to the daughter

"and the daughter has refinanced the property in her own name".