property under living trust?

Question

my parents have their home under the living trust; when they pass on and the house goes to me (im the benificiary), will i have to pay the property tax rate assessed at the newest market value or do i pay the existing property tax rate assessed when my parents bought the home?

if both my parents pass on, and everything is valued at, say 1 million. how much am i exempt from capital gains tax?

Answer 1

Good question. Where I live, the assessors office does an update of the property value on a regular schedule (i.e., every other year, not when someone passes).

You would receive a step-up in basis to the market value when your last parent passes. I would recommend you hire an appraiser at that time if you think you might be subject to an estate tax. Even if you don't think you pay estate tax, a written appraisal is a good idea. Keeps arguments with the IRS to a minimum.

Answer 2

It's usually the newest rate. Just like the other poster, my folks home is reassessed every 5 years, but it is recalculated whenever the property changes hands. If you suspect that it is being over-evaluated, get a second opinion. My brother saved several hundred a year on his property taxes when he found out that the assessment included a finished basement (his was one of only 10% in the area that has an unfinished basement).

Answer 3

Bill is correct but one more thing. When the trust sells the house down the road the trust will pay capital gain tax on the increase in value from death to sale. The 250,000 exclusion is not allowed for a trust.

Answer 4

California under Proposition 13 allows parents to pass their principal residence to their children without revaluation.