DEAR BOB: In 1994, my wife inherited a house from a living trust. We have lived in it since then. When we took possession, it was worth $350,000. Today, it is worth about $1 million. If we sell it today, will we be free from capital gains tax because the property came out of a trust? Or would the first $350,000 be tax-free and we can add our $500,000 to that? – Michael F. DEAR MICHAEL: Congratulations on the outstanding market value appreciation in that home. The adjusted cost basis for the home is its market value on the date of the decedent's death, presumably $350,000. Purchase Bob Bruss reports online. If the net sales price is $1 million, the capital gain is the $650,000 difference between the $350,000 stepped-up basis and the net sales price. Even if the home's title is in ...
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