Legal Question in Wills and Trusts in New York
I live in New York. My parents put their house in an irrevocable trust for me and my brother in 2001 with the right to live in it til death. At that time it was appraised at $265,00 My father passed away in 2004 and my mother passed away in August of 2011. House was sold for $329,000 4 months later in Dec of 2011 by me and my brother as trustees of the irrevocable trust..
My parents paid $19,000.00 for it in 1958.
Question is do we pay capital gains on the 329,000 less the original price of $19,000 or do we pay capital gains on the difference of the $329,000 less the value of $265,000 when it was put into the trust in 2001 or the difference between the $329,000 less the value of when my mother passed away 4 months earlier which the value was the same ?
2 Answers from Attorneys
There is no capital gain tax on the inheritance.
When your parents put the house into the trust in 2001, it was a gift of the remainder interest to you and your brother. As such, you must use their basis less the value of the retained life estate.
You would have to pay capital gains tax on the difference.
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