All Forum Posts by: Jon Pinkerton

My father recently passed away with all of his assets in trust to to be divided equally between his three children.   I am the executor of the estate and I am buying my two siblings out of their interest in the home.   The home was appraised for $464,000.  If it were sold through normal real estate brokerage firms, we would have to pay 6% commission, therefore I deducted 6% from the appraised value to arrive at an adjusted value  of $436,160.   Dividing that by three, each child's interest is $145,386.     My fathers trust stipulates to "divide or distribute property in cash or in kind or partly each"   I am going to take my interest in the property as 1/3 of the property and will be buying my siblings 2/3 interest in the home from the trust.   My question is with Delawares 4% real estate transfer tax, paid 2% by buyer and 2% by seller.     As I have laid out, I would be buying property from Trust for $290,772.   A 2% transfer tax amounts to $5,815 being paid by each buyer and seller.    I read online that a transfer from Parent to Child is exempt from real estate transfer tax.  Does that apply in this case or does the fact that my fathers home was in trust somehow negate this exemption?     Am I missing a strategy that could avoid the paying of transfer taxes?  Thank you in advance!       

@Anthony Rosa Thank you Anthony. That makes sense. I will have a conversation with my tenant to discuss alternative payment methods.

@Patricia Steiner Thank you for your reply Patricia. Yes, I set up a separate security deposit account to hold the security deposit. All good on that front. I will take your suggestion and see what other options my bank offers. Jon

I recently leased a residential property that is titled in a trust. I was delayed in getting a checking / operating account set up as I needed to consult with my lawyer on the proper name that should be on the account and obtain an EiN #. While this was happening, my new tenant needed to pay rent and security deposit. He suggested using Zelle. I set up my personal account to accept and worked fine. I have since gotten my trust account set up and was advised that since it is a business account, I would not be able to use Zelle. I realize I may need to amend the rent payment agreement to come up with an alternative to Zelle. However, if I decide to continue accepting Zelle payment from tenant, can’t I just write a check from my personal account into the business account? Am I creating any commingling of fund problems. I appreciate any insight.

@Dave Toelkes We worked with an estate planning attorney and had placed the property in a revocable trust several years ago. My wife was the only child. and the property passed to my wife outside of probate.

I was able to use Redfin and Zillow to get estimated value back to Oct 2017. A local agent produces an annual sales report for the town that I will use for support.

@Ashish Acharya. Thank you. Makes sense.

@Ashish Acharya if I could follow up with another question... I am on track to establishing the tax basis of the property when my wife inherited it in 10/2017. Since then, I have been fixing up the property getting ready to rent. Paint, flooring, etc. I have not yet put the property “in service” as a rental property as it is not yet advertised for rent. Do I need to calculate a new basis once the property is placed in service as rental property and use that figure when I depreciate for taxes? I feel like I am treading in CPA waters. Might be a good time to bring one on to make sure all is set up properly

My wife inherited her mothers home when she passed in October 2017.    The home is going to become a rental property.   I understand that the basis on which depreciation will be calculated is based on the fair market value at the time of her passing.     Can I use the zillow zestimate as the basis?   Looks to be pretty accurate and I can look back in time to get a value?

@Carl Fischer. Thank you Carl. You bring up several questions that I have been asking myself recently. I am putting a call into my attorney. I read your bio and will be visiting your website on self directed IRA strategies.

@Wayne Brooks. Thank you Wayne. I will call the attorney who wrote the trust. Makes sense as I should be getting our ducks in a row for putting our own trust in place.