[Robert Taylor]

Robert Taylor

I’m working on a property purchase that was passed to the heirs via a Living Trust after the death of their mother. The heirs have held the property for 3 years but are trying to sell the property for the past two years.

Presumably since the property has been held for so long since it was transferred, there are long term capital gains taxes. The question is, what is the basis since it was transferred through a living trust?

Has anyone here dealt with this before?

Thanks,

Robert

[Anonymous]

Anonymous

I’m closing on one this week that has a similar situation.

The step up in basis is the actual fair market value of the property when it is inherited. They pay no taxes if they sell within 2 years ( or that’s my understanding)

Any appreciation over and above the basis after the 2 years period is subject to long term capital gains tax ( 15%)

HOWEVER — this is a good question for Jack Miller for the conference call on Tuesday.

Is there a way to reduce those taxes? Would an installement sale be better than a cash out sale?

I’ll ask Jack on the call.

[Anonymous]

Anonymous

I asked Jack the question on the call last night.

You can listen to the recording in the Learning Center until conference calls

Basically, he said the price the house appraises for at death is the new basis.

If the price goes down after that the heirs get to take a decudtion and if it goes up they pay capital gains — or they ca 1031 exchange to avoid any taxes.

[Robert Taylor]

Robert Taylor

Jackie,

Thanks. That’s kind of what I was assuming, but didn’t want to assume too much.

I missed the call last night due to company. Did you get a chance to ask Jack about this?

Thanks,

Robert