Sale of a house in trust for Medicaid planning

Article Abstract:

Medicaid planning or estate tax planning may involve the transfer of a principal residence to an irrevocable trust. The tax benefits from the sale of a principal residence can be retained by the use of a trust. The capital gains from the sale of the principal residence of the grantor may be eligible for the $125,000 exclusion under Section 121 of the Internal Revenue Code (IRC) or the gain rollover provision of IRC Section 1034 if the grantor is treated as the owner of the trust corpus, and if local law allows capital gains to be allocable to corpus. The powers given to the grantor by the Medicaid trust include the authority to advise trustees about all major investments, and the authority to replace trustees with someone other than the grantor or the grantor's spouse.

Planning, Transfer taxes, Trusts and trustees, Trustees, Trusts (Law)

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Sale, repurchase not a financing arrangement

Article Abstract:

The National Office decided in TAM 9217010 that the transfer of a parcel of real estate and purchase agreements on other parcels from a taxpayer to a third party cannot be considered as a financing agreement even if the taxpayer was attempting to raise funds to develop the real estate. The Office classified the transaction as a sale because it manifested sufficient characteristics of a sale. Among the issues examined by the Office to determine if there was a sale were the transfer of the legal title to the property, the acquisition of equity in the property, the transfer of right of possession and the payment of property taxes.

Laws, regulations and rules, Mergers, acquisitions and divestments, Real estate, Real property, Property acquisition, Repurchase agreements

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