Tax Implications of Pre-Inheritance Property Sales in the context of inheritance planning, it's crucial to understand that selling the family home before the passing of parents carries significant implications. According to government regulations, such a sale is classified as a standard transaction rather than the transfer of an inherited property. Consequently, there's no benefit of a Stepped Up Tax Basis, and capital gains taxes may apply. While the decision to sell may be necessary regardless of tax consequences, it's prudent to seek guidance from a certified public accountant (CPA) to navigate these complexities effectively. THE EVALUATION OF DOCUMENTATION BEFORE PROCEEDING Even if a trust, Power of Attorney and subsequent documentation has been completed by an attorney, they are human, and can forget to cross a “T” in a document, where legal issues may arise, or stall and negate a sale transaction. It’s my normal mode of operation to accumulate a complete copy of the trust, and any other applicable documentation and submit it to the title insurance company legal staff for complete review, before moving forward with taking a listing or marketing a property. I say it’s never too early to start making sure the legal elements have been reviewed and approved by the title insurance company that will be verifying the legal capacity of the person signing the deed and other transactional documentation. The title company will be issuing a title insurance policy to the buyer, and new lender, that the sales transaction was executed properly. Real estate agents should ensure all legal elements are verified and approved to prevent complications during transactions. Too many real estate agents don’t do their homework and due diligence in these matters. Everyone can get broadsided with legal complications in the middle of a transaction. There might
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