QUESTION
Will I need to pay taxes on the sale of a home that I received through a living trust?
Asked on Aug 31st, 2017 on Real Estate - California
More details to this question:
My mother passed away in March 2017. Her home was placed into a revocable living trust prior to her death. The home is to sell in September 2017 for about $220,000. My father is the trustee on the trust. He will be splitting the money from the sale between my brothers and me. Will I have to pay any taxes on my share? Also, the home was my parents primary residence for over 20 years.
1 ANSWER
No, probably not, or at least, not much.
If your mother was the only owner of the house, then when she passed away, the tax basis for the house, used to compute any taxable capital gain, automatically increased to the fair market value on the date of her death. If the home has gone up in value after she passed away, then that marginal increase in the value after the date-of-death would be taxed.
If they both owned it, were married, and lived in California, then the result would be the same. The whole property gets a stepped-up tax basis. If they were not married or for some other reason the property did not count as community property, then only your mother's shae would get a stepped up basis, and not your surviving faher's share.
Where in California is a house worth onlye $220,000.00?
Dana
Answered on Sep 03rd, 2017 at 4:14 PM