Question about capital gains exclusion on primary residence
Question for the tax pros out there.
If someone inherits a home from a trust after death of the owner, and the home is their primary residence, does the two year period to exclude capital gains on the sale of a primary residence start from the date of death or the date the house was distributed from the trust?
For example - Mother dies May 1st and house is in a trust, leaving home to son who is living there. But the deed is not transfered to him until November.
The son decides to keep living in the house for now. When the son eventually sells the house, does he have to wait 2 years starting from May or November to get the 250k primary residence capital gains exclusion?
#3 1031 Exchanges Contributor
- Investor
- Las Vegas, NV
I don’t know about the 2 year calendar, probably the day you actually inherit. If you lived there 2 years before inheriting it obviously wasn’t your primary when you didn’t own it.
But. It shouldn’t matter. On the day you inherit the property you inherit the value that day as your cost. So if you sell the next day or a year later and it costs you 6-10% to sell your profit should be zero, maybe even a small loss.
@Alison S Interesting.. I'd figure it'd be when the Title is changed over to the son. The irs exclusion I thought was for ownership, which requires holding Title. If there is some exception for inheritance I don't know.
The step up in basis is on the date of passing. The Trust should bypass probate the Decedent's Estate. I'm sure there is some administrative time for the Trust to empty itself. So, the clock should start when Title is transferred.
Obviously, if it takes some time to transfer you can build up some appreciation depending on market conditions, and good to know especially for the heir to sell in a timely fashion to take advantage of the exclusion.
Good luck.
Good luck.
