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Updated 12 months ago on . Most recent reply

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11
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Jon Pinkerton
  • Rental Property Investor
1
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11
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Transferring real estate from trust to child

Jon Pinkerton
  • Rental Property Investor
Posted

My father recently passed away with all of his assets in trust to to be divided equally between his three children.   I am the executor of the estate and I am buying my two siblings out of their interest in the home.   The home was appraised for $464,000.  If it were sold through normal real estate brokerage firms, we would have to pay 6% commission, therefore I deducted 6% from the appraised value to arrive at an adjusted value  of $436,160.   Dividing that by three, each child's interest is $145,386.     My fathers trust stipulates to "divide or distribute property in cash or in kind or partly each"   I am going to take my interest in the property as 1/3 of the property and will be buying my siblings 2/3 interest in the home from the trust.   My question is with Delawares 4% real estate transfer tax, paid 2% by buyer and 2% by seller.     As I have laid out, I would be buying property from Trust for $290,772.   A 2% transfer tax amounts to $5,815 being paid by each buyer and seller.    I read online that a transfer from Parent to Child is exempt from real estate transfer tax.  Does that apply in this case or does the fact that my fathers home was in trust somehow negate this exemption?     Am I missing a strategy that could avoid the paying of transfer taxes?  Thank you in advance!       

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