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Taxes on the sale of property held in family trust?
While she was still with us, our mother signed over the deed to her home to all 5 offspring jointly. We created a joint trust with the house as the only asset, with all five siblings as joint trustees. A few year later, we are now selling the property with the proceeds to be divided evenly among the five joint trustees. Will we owe taxes? If so, what will be the basis? Thank you.
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Yes - you will owe taxes on any gain in the property over its cost basis. Since the property was a gift, the cost basis for tax purposes is equal to your mother's original cost basis - which would be her original purchase price plus the cost of any capital improvements that she may have made to the property - plus any capital improvements the 5 of you may have made after you took ownership. This assumes that the fair market value of the property when she gave it to you was greater than her cost basis. It gets a little more complicated if it the FMV at that time was less than her cost basis - here's a site that explains the rules: Cost Basis - Gifts
Since the property was jointly owned between siblings you each report your share of the sales proceeds and cost basis on schedule D. |
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