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Updated almost 8 years ago on . Most recent reply

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Deanna McCormick
  • Minneapolis, MN
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Capital Gains ? What could I expect to pay, how to calculate ?

Deanna McCormick
  • Minneapolis, MN
Posted

I have a property I manage for a trust, that will sell for lets say 400 k

At the time of first grantors death the property was appraised at 325 K.

At the time of second grantors death the property was appraised at 375 K

difference between those dates of death is 50 k 

and difference between the last appraisal of 375 and selling price 400 is 25 K.

I don't understand how the stepped up basis works, if the trust is in the 28% tax bracket what the expected capitol gains tax is based on. 

Would it be the paid on the 50K difference between the 2 grantors ? 

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Jeff B.
  • Buy & Hold Owner
  • Redlands, CA
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Jeff B.
  • Buy & Hold Owner
  • Redlands, CA
Replied

Assuming the beneficiaries are on the trust,

at the demise of the last creator, the beneficiaries take possession/ownership on that date at the FMV of the property - - ie the setup is to FMV. Any sale post the title change will be the diff from date of ownership to the date of the sale, should be near nill, and thus the Settlement Statement about goes tax free to the beneficiaries. After all, that's the intent of using a trust.

You'll need to give notice, have a reading, and full accounting of the disposition of the assets.

As a tip: I had financial POA and got that recognized by the bank. Then used that checking account as the 'clearing house' for the assets, turning the bank statements into the asset disbursement reconciliation. Write the beneficiary's shares as the last transactions on the account and close it.

I'm no lawyer, but this was my experience managing mom & dad's estate in Calif.

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