Tax Guru – Ker$tetter Letter

Q:

Subject: capital gains

 

If my parents put their home in a realty trust in 2004 and they passed away and the gain on the sale of the house is $600,00 do I get a stepped up basis as of the time of their death or does that fact that it is in a realty trust change that?

A:

You are going to need to consult with someone who can analyze the specific facts more closely because there are many different kinds of trusts.  If it is a QPRT (Qualified Personal Residence Trust), there are different consequences depending on how long the trust was established for.  In some cases, the basis does get stepped up, while in others it remains the same as it was for your parents.

You can get a flavor for how complicated this can be by Googling for QPRT, such as in this article.

I would think that you could probably get a good answer by consulting with either the attorney who set up the trust or the accountant who has been keeping the books and preparing the tax returns for the trust, if it is one of the types that requires annual income tax returns.

Good luck.

Kerry Kerstetter