Do you have to pay capital gains on the sale of a house if it is in an irrevocable Trust?

The grantor is living.

Asked on August 7, 2014 under Estate Planning, New Jersey

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

Capital gains are not income to irrevocable trusts. They're contributions to corpus – the initial assets that funded the trust. Therefore, if your simple irrevocable trust sells a home you transferred into it, the capital gains would not be distributed and the trust would have to pay taxes on the profit. So yes, the trust pays the tax. The IRS does not let it slide.

 


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