Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 06-10-2017, 02:37 PM
Junior Member
 
Join Date: Jun 2017
Posts: 1
Basis for a home in a trust

Background: Female gets married, has two children, gets divorced (keeps the house), writes a revocable Living Trust with the children as beneficiaries, then dies in 2012 while the children are minors. The house goes into the trust (now irrevocable) and the ex-husband moves into the house to care for the children.

Question: The children, now adults, want to sell the house ($1.1M). The house is still in the trust. What is their basis? The original purchase price ($400k), the value when their mother died ($740k), or something else?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 06-10-2017, 04:59 PM
Moderator
 
Join Date: Oct 2010
Posts: 4,724
Quote:
Originally Posted by kinosh View Post
Background: Female gets married, has two children, gets divorced (keeps the house), writes a revocable Living Trust with the children as beneficiaries, then dies in 2012 while the children are minors. The house goes into the trust (now irrevocable) and the ex-husband moves into the house to care for the children.

Question: The children, now adults, want to sell the house ($1.1M). The house is still in the trust. What is their basis? The original purchase price ($400k), the value when their mother died ($740k), or something else?
Question: The children, now adults, want to sell the house ($1.1M). The house is still in the trust. What is their basis? =========>> Assets that have been conveyed into a (ir)revocable living trust do get a step-up in basis when they are distributed to the beneficiaries after the passing of the grantor;basis is an individual gets in property he inherits from another. This is an important area and is too often overlooked when families start to put their affairs in order. The general rule is referred to as the ?step-up? basis rule. That is, the heir receives a basis in inherited property equal to its date of death value. So, for example, if the basis of the house( original purchase cost) was for $200K and it's worth $5 00K at her death, the basis is stepped up to $500K ,NOT $200K,in the hands of her heirs and all of that gain escapes income taxation forever.


The original purchase price ($400k), the value when their mother died ($740k), or something else?=====> When a beneficiary inherits property from a decedent, the asset receives a step-up in basis to its value on the date of deaththen, its basis is $740K; ALSO if they inherit the home and used it as primary home then they qualify for the $250k/$500k home sale tax exclusion. The tax law provides homeowners with a very generous tax exclusion when they sell their property. Up to $250K of any gain from such a sale received by a single homeowner is tax free



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Where to list home sale on 1041 Trust return kgilby Trusts and Gift Tax Returns 8 03-29-2015 04:04 PM
Cost basis for stocks inherited from an individual through a Residuary Trust dwgoodgroup Capital Gains 0 02-20-2015 06:50 AM
Sold home to investor trust-who deducts real estate taxes & interest Kmcc1205 Itemized Deductions 1 01-19-2014 12:47 AM
Irrevocable Income Only Trust - Real Estate Property Cost Basis/Distributions Question. PART 2 jdcaro55 Trusts and Gift Tax Returns 0 02-19-2013 06:41 PM
Irrevocable Income Only Trust - Real Estate Property Cost Basis/Distributions Question. jdcaro55 Trusts and Gift Tax Returns 5 02-01-2013 01:58 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning