Capital Gains Taxes on a Trust House in Chicago (Northside)
My wife is the Trustee of her late father’s brick bungalow (in the city) that was put into a Trust before he passed away. Our three adult children are the beneficaries in the Trust. My wife and I (along with our three children) are getting ready to sell the Trust House and the proceeds will be divided evenly among the three children. My wife’s concern is how to best minimize the Capital Gains tax for our three children? The realtor estimates that the Trust House could bring anywhere from $250K to $400K at the time of sale. BTW, my wife and I are retired and in our seventies if that plays any factor in this scenario. Any advice will be very much appreciated!
Terry Says
Read this article, and you need an accountant to help you. I don’t know what kind of trust was the owner of the house, and how long ago her father passed away.
There may be no capital gains tax if he passed recently, as in most cases the heirs get the cost basis as the value of the home on the date of death. Forget the realtor’s advice. In fact, get a new realtor if she can’t estimate closer than a $150,000 sales price range!
Ask the estate planning attorney who created the trust, and your CPA, whether the heirs get a “step-up” in value to the value at date of death. If that was within the past 6 months, there is likely no gain to tax.
