Legal Question in Wills and Trusts in California
Mother passed away in 2007
Mymother in law passed away in 2007, her home was in her living trust and the deed of was never transferred to the siblings who were the recipients of her living trust. There were 4 siblings. My husband was one of them. We exchanged our interest (1/4) of ownership in this home for a reduction of a home his brother sold to us in 2008. We never showed this sale of our interest in his mother's home on our 2008 individual tax returns. There is nothing in writing regarding the exhange of our interest in his mother's home vs. the reduction of the purchase of his brother's home. Please advise.
1 Answer from Attorneys
Re: Mother passed away in 2007
You ought to have some kind of written agreement, at least to establish your basis in the new property for capital gains purposes when you later sell it.
Ask a tax advisor about any possible capital gains taxes on the 2008 sale--because inherited property gets a new basis (fair market value) on the date of death, the taxes owed are likely small, if any.