Q: My CA home is in my trust. If my trustee sells my home after I have died what are the tax consequences for my trust.
home bought for $1.5 million. Assume sales price is $3 million.
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A:
When your trustee sells your California home after your passing, the trust benefits from a step-up in basis. This means the property's value is adjusted to its fair market value at the time of your death, which in this case is $3 million. Since the home is sold for the same amount, there would typically be no capital gains tax owed on the sale.
Additionally, the trust may need to file a California state tax return, depending on its income and activities. However, because the sale price matches the stepped-up basis, there shouldn’t be any significant tax liability from the transaction itself.
It's important to ensure that all necessary documentation is properly handled to reflect the step-up in basis. Consulting with a tax professional can provide further guidance tailored to your specific situation, ensuring that the trust manages the sale efficiently and in compliance with all applicable tax laws.
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