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dana a · Apr 26, 2008, 06:41 PM

My mother recently passed away and her house was in a trust we set up along with my brother. It seems in Calif. There is no taxes to be paid as nothing was actually sold. My question is... if we were to sell house... (under a million dollar value) would we have to pay either state or federal taxes on that sale? Thanks for any info... Dana

MukatA · Apr 26, 2008, 06:57 PM

There is no federal inheritance tax and CA also does not have inheritance tax. So till you sell the house, there is no inheritance tax liability.
If you sell the house, you may have a profit that you must report. The cost value of the house is the fair market value at the date of death.
For more information read: Your U.S. Tax Return: Tax on Inheritances

There may be estate tax liability. If the total estate of the deceased in 2 million or more, you must file estate tax return.

dana a · Apr 27, 2008, 04:16 PM

Originally Posted by MukatA

There is no federal inheritance tax and CA also does not have inheritance tax. So till you sell the house, there is no inheritance tax liability.
If you sell the house, you may have a profit that you must report. The cost value of the house is the fair market value at the date of death.
For more information read: Your U.S. Tax Return: Tax on Inheritances

There may be estate tax liability. If the total estate of the deceased in 2 million or more, you must file estate tax return.

Thank you for your answer. Possibly you could give me a little more information on my specific case. My brother and I were both put on the deed in 1998. I would say that at the time the house was worth 300k. In 2004 I put the house in MY trust.. he did not. Now the house is worth around 500k. The house has been rented for the last 3 years but we have not taken any funds from that rental.. just used the monies to keep her in a nursing home. Since her passing the deed will be put in both our names. I understand there is some sort of "cost basis". Is there some sort of precedent that would allow us to go back to were it was in 1998 cost basis? Again, thanks for your help, Dana

ScottGem · Apr 27, 2008, 04:52 PM

I think you need to consult a tax attorney or real estate lawyer on this. You have muddled the ownership of the house to the point where you need a professional to determine what the cost basis should be. By renting the house, you also converted it from residential to commercial property which may have a bearing on this.