Legal Question in Wills and Trusts in Massachusetts

how are the taxes calculated when the tenants of life estate die and the beneficiary gets the real estate? is capital gain calculated on current value of the property or value when the estate was put in life estate? what is the best way to minimize capital gains taxes?

Asked on 5/31/17, 2:00 am

1 Answer from Attorneys

Denise Leydon Harvey Harvey Law Offices

In Massachusetts, the remaindermen's basis in the property is determined at the date of death of the life tenant. They get the "step up" in basis for capital gains income taxes. Usually there are little or no capital gains at the time of the final "transfer" - the date of the life tenant's death. If the remaindermen keep the property and sell it after it has appreciated in value, they are subject to the capital gains they earn over and above the value on the date of the life tenant's death.

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Answered on 6/01/17, 8:49 am

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