Scenario: Person is mid-30’s, an only child, and executor of her parent’s estate. The part of the estate that will go through probate is not very large. The highest valued asset that will go through probate is a home worth 550k, with no mortgage. The purchase price of the home was 215k. The house is to be sold.
I believe this is more of tax question than anything else, but would appreciate other thoughts. Would it make any difference if the heir:
- sold the home while in probate, thus leaving the 300k profit for the estate to deal with.
- took possession of the home, but immediately sold it (with the stepped up basis) for practically no profit. I am unfamiliar with any length of ownership requirements or whether they have any bearing on a no-profit sale.
The heir has a lawyer, but I like multiple opinions, especially from the type of shrewd thinkers who inhabit this board. Besides, she is an estate lawyer and may not be as well versed in tax issues as one would like.
All opinion’s welcomed.