Devolving 1031 and Taxes

chisueNovember 8, 2006

I know I need to consult an accountant and possibly an attorney, but maybe someone here has had experience with this scenario:

Irrevocable trust owns a rental property that was purchased using 1031 laws five years ago.

Sole Trustee dies. Trust, including the 1031 property, is inherited by trustee's child.

Does the rental property get re-valued at stepped-up price?

What taxes apply if inheritor sells the rental property immediately? What if inheritor lives in property for two years, then sells?

Thanks for any information or link to information that addresses this particular situation!

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davidandkasie

consult an attorney and an accoutant in the jurisdiction where the property is located.

    Bookmark   November 8, 2006 at 5:17PM
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partst

I would be interested in what you find out.

From what I recall when my dad set up a by pass trust, irrevocable, after my mother passed away that included income property I was told I would have to have it appraised again at the time of his death and I would get the step up value. No 1031 involved so it may be different.

This was a long time ago and all I know is his attorney and accountant will be the first ones I call to settle the estate.

Keep us up dated with what you learn.

    Bookmark   November 9, 2006 at 2:00PM
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chisue

not2old -- Yes, I know property gets re-valued upon death of the owner. The difference here is a) This is rental property subject to 1031 federal tax rules and b) Is owned by an Irrevocable Trust.

davidandkasie -- As I said upfront, I am only asking if someone here has had similar experience. This concerns FEDERAL law, so anyone in the USA might have been in the same circumstance.

    Bookmark   November 11, 2006 at 11:29AM
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