You are currently browsing comments. If you would like to return to the full story, you can read the full entry here: “Is the profit on the sale of a home that is in a “Trust” taxable?”.
-
Archives
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
-
Resources
-
Meta
Caffeinated Content for WordPress
A personal residence is subject to a tax exemption if the owner lived in it for two of the last five years. If your mother occupied the house, the tax may be avoided. If she did not, the tax may have to be paid. However, this questions cannot be answered because you provide no information on the conditions in the trust. A tax accountant may be able to give you an answer after examining the trust.
Caffeinated Content
The house would receive a step up in basis at your mother-in-laws death. If that was recent, it is unlikely that there would be any tax owed on her share. You mentioned that it was in a complex trust. If another trust owned part of the property, that part would not receive a step up in basis.
Jim Kirby, CPA/PFS, CFP, CFS
Caffeinated Content for WordPress
What kind of trust is this? (“complex trust” is a tax phrase, it doesn’t tell me anything other than some of the principle is being distributed.)
Was this a grantor type trust (often used to organize assets) that became irrevocable when your MIL died? If so, the trust inherited the house at the fair market value on the date of death. If it’s gone up in value since then, only the gain is taxable.
If this was a trust with a different purpose–eg, was irrevocable before she died, my answer would be different.
Create a video blog
If the trust was a grantor trust designed solely to avoid probate it is treated as though it didn’t exist for tax purposes and the value would be stepped up to what it was worth when your mother-in-law died and when sold would be treated as long term capital gain. Treatment from other trusts would depend on the type of trust it was (besides simple or complex.) You will need a pro to sort it out.