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Trust liquidation rental prop

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    #1

    Trust liquidation rental prop

    I have a trust that is 10 plus years old. Father died and left rental property to son in TRUST, sole beneficiary. Trust must stay in place to son’s age 35, per trust, he is 34 now.
    If property is sold now ( high valuations here in NY), there will be ordinary income (from recapture) and Capital Gaines in TRUST.

    Trust will end in 10 months.

    Home will be transferred to son as beneficiary of trust at age 35 and trust closed. All rental activity will cease. Son will have to reside in inherited home (from trust) for 2 years and then will qualify for $250,000 EXCLUSION.

    Is there any problem with this plan?

    Does the exclusion only apply to Capital Gaines?
    Last edited by BOB W; 07-27-2021, 02:39 PM.
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.
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    #2
    Would suggest the bene do exactly as you have outlined as far as letting trust terminate naturally, and transfer property to him personally. If he wishes to live in it for 2 yrs, he can take advantage of the exclusion. After deduction of closing costs at sale, he can use $250K towards the appreciation of FMV over basis at time trust was established, plus improvements while in trust, less depreciation taken.
    Last edited by Burke; 08-04-2021, 03:50 PM.

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      #3
      THANKS for your time....
      This post is for discussion purposes only and should be verified with other sources before actual use.

      Many times I post additional info on the post, Click on "message board" for updated content.

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