Selling “Basis” portion of property to a partner

[Nick Drury]

When selling a portion of a property to a partner, is it possible to sell the “basis” value portion of my property and not the “capital gain” portion such that I don’t incur capital gains taxes upon sale?

When selling stocks it’s possible adjust whether selling older or newer shares (first in-last out or first in-first out) so one can effectively choose to sell shares that have more or less capital gain associated. Curious if real estate tax rules have similar flexibility.

Any guidance would be greatly appreciated. Thanks in advance for any help or suggestions!

[Joshua Thompson]

Hey Nick

I'm not a tax professional so you will want to also hear from the good professionals on here.

From what I've read it shouldn't be an issue if you're in a partnership and you want your partner to buy you out at your basis. From what I've read this doesn't usually create tax but you do have to determine what your basis is, as it may or may not be cut and dry as it sounds. 

Why would you want to do this? It almost seems like it defeats the purpose of investing in the first place.

If you're trying to do this as a gift you may run into the issue of a bargain sale.

Also, depending on your situation and further details could change the answer.

Would love for any of the professionals to let me know if they agree or disagree!