QUESTION
House that was in irrevocable trust sold by trustees after donors death, what Capital gains are owed
Asked on Jan 15th, 2012 on Trusts and Estates - New York
More details to this question:
I am getting contradicting answers to the question below. Someone said I get a step up and no (or little) captial gains, one said I pay on difference between selling price of $329,000 less the base cost they paid in 1958 of $19,000.00 plus any home improvements.
. My parents put thier house in an irrevocable trust for me and my brother in 2001 with the understanding that they could live in it til death. Original cost of house in 1958 was $19,000.00 At that time of the trust in 2001 it was appraised at $265,00 My father passed away in 2004 and my mother passed away in August of 2011. House was sold for $329,000 4 months later in Dec of 2011 by me and my brother as trustees of the irrevocable trust..
What is the capital gains based on
1 ANSWER
Whether there is a step-up in basis depends on the type of trust and the terms of the trust. If your parents reserved the right to use and enjoy the property during their lifetimes, then the house for tax purposes should be considered to pass upon death, be part of their taxable estate, and you would get the step-up. That way the basis when you sell the house is considered the date of death value. You need to have an attorney check the trust terms to make sure it was properly done.
Answered on Jan 22nd, 2012 at 12:41 PM