Recording sale of house in trust

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Marq1
Posts: 18
Joined: Sun Feb 11, 2024 1:24 am

Recording sale of house in trust

Post by Marq1 »

My mom passed away is 2023 and she had all her investments and her house in a trust, everything converted over to the siblings without an issues.

I am the executor.

We sold her house in 2023, no issues.

I am doing her final taxes for 2023.

Where is the sale of the house recorded, in her taxes or mine?

Since the sale of the house was within the trust does it even need to be reported, nothing else that was sold or distributed to the siblings was recorded.

There would be no capital gains, it was only a $160K gain. Doing her taxes I find that if I declare the house was sold nothing happens to Federal taxes but she loses a property tax credit from the state, about $1K.

I can not find nothing that explains if, or how to handle this! It has to be a common occurrence!
fabdog
Posts: 2539
Joined: Wed Jan 16, 2013 12:59 pm
Location: Williamsburg VA

Re: Recording sale of house in trust

Post by fabdog »

in most scenarios, your Mom's trust would become irrevocable on her passing. Then any income/expenses get reported on a separate trust return (form 1041)

any gains or losses would be allocated to the beneficiaries on this form

so it sounds like all the investments got distributed, likely very little income, and the house sale would be reported also. You mention no taxes, but also a $160K gain. The house (depending on history) would have gotten a stepped up basis at her passing, so after any expenses the trust likely had a loss, which would be reported to beneficiaries on their K1

Her final 1040 should cover income and expenses thru her DOD

Mike
Silk McCue
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Joined: Thu Feb 25, 2016 6:11 pm

Re: Recording sale of house in trust

Post by Silk McCue »

If it is an intentionally defective grantor trust it will not receive a step up basis.

https://www.thetaxadviser.com/issues/20 ... death.html

Cheers
Topic Author
Marq1
Posts: 18
Joined: Sun Feb 11, 2024 1:24 am

Re: Recording sale of house in trust

Post by Marq1 »

You mention no taxes,
In that the profit from her sale was below the 250K exclusion.

So to clarify, the house was part of the trust, then the trust would be the vehicle that sells the property, and all individuals that were part of the inheritance would gain/loss from that activity.

Distribution of assets and sale of house was within 4 months of her passing so technically everything was the cost basis so there was no profits.

The property sale was after she passed away so she would not be recording the sale on her final federal tax return.
fabdog
Posts: 2539
Joined: Wed Jan 16, 2013 12:59 pm
Location: Williamsburg VA

Re: Recording sale of house in trust

Post by fabdog »

So to clarify, the house was part of the trust, then the trust would be the vehicle that sells the property, and all individuals that were part of the inheritance would gain/loss from that activity. correct

Distribution of assets and sale of house was within 4 months of her passing so technically everything was the cost basis so there was no profits.
correct. Assuming you had some costs to sell the house (brokerage, recording fees, etc) those would contribute to a loss, which would get passed to beneficiaries

The property sale was after she passed away so she would not be recording the sale on her final federal tax return. correct
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Lee_WSP
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Location: Arizona

Re: Recording sale of house in trust

Post by Lee_WSP »

Its reported on the 1041 (estate and trusts income tax return). You can opt to file one 1041 for both the estate and trust, but see a tax specialist on this election.

You issue schedule k's for the distributions.

There is no gains because it was probably stepped up. Unless she died in 2020.
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