My mother had a trust, and when she passed away, me and my brother sold her house; do I have to pay taxes on my share of the proceeds? 

My mother had a trust, and when she passed away, me and my brother sold her house. We divided the proceeds. Do I have to pay taxes on my share of the proceeds? 

Estate Planning, Real Estate, Taxes
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March 2018

The tax impact of the sale of the home will depend on the type of Trust your Mother established.

If the Trust was a Revocable Trust then the home was likely includable in your mother’s taxable estate. If that is the case, at her death the home received a step-up in cost basis. This means that the cost-basis of the home reset to the home’s market value as of your mother’s date of death. As a result, there would likely be very little, if any, taxable gain for you to report as income.

Alternatively, if the home had been placed in an irrevocable trust, like a Qualified Personal Residence Trust, before your Mother’s death it likely would be excluded from her taxable estate and therefore, not receive a step-up in cost basis. The difference between what was paid for the house and what it was sold for would create a capital gain. If the proceeds were then distributed from the Trust to you and your brother you would each pick up that taxable gain on your personal income tax return.

March 2018
March 2018
March 2018
March 2018