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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 33781
Experience:  15 years real estate, Realtor. Landlord 26 years
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My mother has a Life Estate on her home, setup with her

Customer Question

My mother has a Life Estate on her home, setup with her children. She wants to sell the home. This means her children's distributions from the sale will be subject to capital gains tax. Is that considered long-term capital gains, so is taxed at 15% or is it taxed at some other rate? The Life Estate Deed was established 10 years ago.
Submitted: 4 months ago.
Category: Real Estate Law
Expert:  Barrister replied 4 months ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.

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If mother wants to sell and the children agree, then they would be agreeing to sell their remainder interests and since they have owned them over a year, then they would be subject to long term capital gains tax rates. The actual rate would depend on each child's personal income tax rate and would range from 0% up to 20%..

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thanks

Barrister

Customer: replied 4 months ago.
Thank you Barrister. The children live in New York, Connecticut and Vermont. Would those remainder interests be subject to state tax as well ?
Expert:  Barrister replied 4 months ago.

You are very welcome. Glad to help any time.. And yes, there are only 9 states that don't impose state capital gains taxes and those 3 states are not part of the nine..

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NY has a max rate of 8.8% CT is 6.7% and VT is 9%.

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thanks

Barrister

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