Rochester, MN asked in Estate Planning and Real Estate Law for Minnesota

Q: How do I calculate life estate remainder interest value? Please help.

Won't let me edit main question, but please read-on... I purchased my fathers remainder interest last year at a value based on Minnesota's "Life Estate Mortality Table" which seems to be the same for all states. I fixed-up the home and am selling so will need to calculate value according to the IRS (for calculating basis for capital gains) which I had assumed used the same table, however I see the IRS references "actuarial tables" that includes a "mortality table" and "Table S" which seem very different from the Minnesota tables. Also, table S lists various sections based on an interest rate. I'm confused, please advise if you can. Thank you! Links below.

I need to calculate my basis now, a portion of which should be my father's original basis that I can claim since I already had a right to it as remainderman prior to buyout.

http://hcopub.dhs.state.mn.us/hcpmstd/19_25_15_20.htm

https://www.irs.gov/retirement-plans/actuarial-tables

1 Lawyer Answer
Nina Whitehurst
Nina Whitehurst
PREMIUM
Answered
  • Estate Planning Lawyer
  • Crossville, TN

A: Your basis in the remainder interest is what you paid for it plus any other costs of acquisition, such as recording fees and documentary transfer taxes, if any, and title and escrow fees, if any. As far as the sale price goes, it is whatever the market will bear. Consulting actuarial tables is not particularly useful in this regard. An appraisal would be more appropriate for determining a proper asking price. Do be prepared for an appraised value of zero, however, as there is not much of a market for remainder interests.

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