What are the taxes on a trust account property?
Taxes will be owed to the extent that the proceeds from the sale of the home exceed the cost basis of the home. Who will pay the tax will depend on a variety of factors.
If your parents had placed their home in a Qualified Personal Residence Trust (QPRT) prior to their deaths, the cost basis of the home is likely whatever their cost basis was prior to the gift.
Alternatively, if your parent’s owned the home via a Revocable Trust, then the home may have received a cost basis step up as of their respective dates of death.
If you are planning on distributing the proceeds of the sale of the home out of the trust to the trust’s beneficiaries then they will likely pick up the tax impact on their personal tax return. This is a concept known as distributable net income and the trust will likely need to generate a K-1 for each beneficiary receiving a distribution.
Alternatively, if assets are not being distributed because of the term of the trust, the trust itself will likely need to file a tax return.
The mechanics of all of this can get complicated quickly, would recommend working with an accountant/attorney to make sure it is administered properly.