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Michael Lykken, Esq
Michael Lykken, Esq,
Category: Estate Law
Satisfied Customers: 85
Experience:  Partner at Soares & Lykken, Attorneys at Law
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When a person transfers a primary residence to a revocable

Customer Question

When a person transfers a primary residence to a revocable trust, does that trigger a "step-up" basis, similar to an inheritance under IRC § 1014, or is it a carryover basis under IRC § 1015?
Submitted: 8 months ago.
Category: Estate Law
Customer: replied 8 months ago.
Citation to primary authority (e.g. statutes, regulation, and court opinions) would be greatly appreciated.
Expert:  Michael Lykken, Esq replied 8 months ago.
Hello and thank you for using this service. My name is ***** ***** I am a licensed California attorney. Please understand that I can only provide you with general advice in this forum.Now, in regard to your question. Transferring your real property to a revocable living trust does not cause a step-up-in-basis. Your basis remains the same because the revocable living trust can be revoked at any time and thus you are still the owner of the property. In the eyes of the IRS, a revocable living trust is a legal fiction because, although you hold title as trustee of your trust, you are still the ultimate owner of the property in the eyes of the IRS. This also will not trigger a reassessment of the property for your property taxes. There really aren't any cites I can give you as the step-up in basis deals with transfers upon death, and carry-over basis doesn't apply because you are still the legal owner of the property. Are you concerned about selling the property and want to avoid capital gains? You still qualify for the exemption under Section 121 if that helps. Please let me know if you need clarification. Also, please understand that I only receive credit for helping you if you rate my service, so I would appreciate it if you would do so. Thank you!

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