I have a relative who owns a home. It is worth $500-600k. I believe they own it free/clear. or it may have a very very smallm mortgage on it…under 100k.
the home is held via a living trust, with me andother family members named as beneficiaries in the event of their death.
assuming my relative dies…and the house is then owned by myself or one of the other named beneficiaries – I assume that we take the property at the original basis…with the original property tax rate?
the house has been owned for over 25 years…was bougth for $50-60k… and property taxes were calculated at that low purchase price.
if the house changes hands under the trust… and then is sold… do I pay taxes on the “gain”… or do I take the house with the new “higher” current market value basis..such that the gains made over the past 25 years are insulated from any taxes?
would the property tax be able to be reset by the county when the property changes hands?
assuming the house will be kept and rented… versus sold outright…is there a better way to transfer title than a living trust?
“if the house changes hands under the trust… and then is sold… do I pay taxes on the “gain”… or do I take the house with the new “higher” current market value basis..such that the gains made over the past 25 years are insulated from any taxes?”
I believe when the beneficiaries get the house, it will be re-appraised, and their basis will be on today’s market value.
Best to check with the lawyers who wrote the trust.
Well written trusts will give you the house at a new basis based on today’s market. Seems to me that there is some rule about that, though. The basis can only be adjusted once, maybe twice on the same property. Check into it.
There are two important and very different issues here to get answered. I may be stating the obvious but for real estate tax purposes, it would be best to have the assessed value remain low. To the contrary for federal income taxes, you would want a step-up in tax basis to current market value. Check with a professional but you should be able to accomplish both.
I inherited a mobile home in a senior park, they reasessed it. I got it free and clear, gave it to my mom. They waved some fees for transfer from parent to child.
If the property was purchased prior to chapter 13 you inherit the low taxes, of course.
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