Better for heirs to sell now or keep vacation home in trust?

vacation home= approx 2.5mil, is currently in living trust. Best to sell now, put $in trust, or keep? What are tax advantages either way? only Mom surviving. Family considering selling now. She not need for income at this time, and is fine either way (emotionally, financially, etc.). Some fam members wish to sell so 1. They can give them some $ monthly, 2. They believe taxes higher if inherit home vs cash. House is one of a kind @ Lake Tahoe. I would like to see it stay in fam. That is what my dad wished. He passed less than year ago. Their own residence in trust as well. Worth approx 800,000+/-? Parents very private, not a lot of info. I want what's best for Mom, AND like to keep in fam if poss. Advantages/disad? Anything can do/set up now to avoid taxation etc?
chereiread
Asked Aug 28, 2012
Since that vacation home is currently held in living trust, it's protected from property appraisals, taxes, and payments of debts. The property is also safe from getting sold and the profits from its sale distributed to the heirs.

It seems your Mother may revoke that trust any time. In case she does, she must make sure the beneficiaries of the properties and other assets included in the trust will receive their inheritance as they were meant to be. If you're the beneficiary of your family's vacation home at Lake Tahoe, then you don't have to worry about other family members getting hold of the deed and selling it as soon as possible. Otherwise, you may need to talk with your mother about the advantages of giving that lakeside property to you.

First of all, you're already planning to keep the house in the family's assets. You can be trusted to preserve the legacy left behind by your father and also the same family legacy that your mother should leave under your care. Keeping a secondary home as part of your personal assets may cost you annual insurance costs and payments of property taxes, which are deductible from your personal income. As your personal residence, you're allowed to deduct interest on mortgage debts amounting to a million dollars or less. Furthermore, you can subtract up to an additional $100,000 in home equity loans, too. By the end of the fiscal year, you'll likely pay less in income taxes than the previous year.

Secondly, there's a way for you to enjoy a tax-free benefit from your vacation home. Rent out this lakeside place for less than 15 days each year to tourists and vacationers. You must still use the place as a vacation house or rent it out at less than its fair market value to a family member for more than 14 days each year. These two criteria keeps your vacation home under the personal residence classification, which also allows you the usual deductions. Even if you charged $1,000 for a two-week stay at your Lake Tahoe home, you'll earn this rent without paying a dime on income tax. Plus, there's no need to declare this as extra earnings on your Schedule A.

Comparable facilities in Lake Tahoe probably cost more than a thousand for fifteen days. If you were to invest $15,000 in some repairs and improvements, and perhaps charge $150 each night, then you'll earn around $2,250 in rent after two weeks. After seven years of renting out your lakeside home, you'll be able to recover your investment costs. Of course, the overhead costs incurred while there's a tenant at the vacation house are not deductible from the rental income. Even when there's nobody staying at the house in Lake Tahoe for the rest of the year, those months are still considered spent for personal use. And so, you'd still be responsible for the maintenance, housekeeping and overhead expenses.
glennrice
Answered Nov 24, 2012
Sisters Trinity and Shayla take you along as they journey through a luxury vacation home at the Reunion Resort in Orlando Florida that would make Disney and Universal proud. My favorite room is at 3:13
First video so please be kind :)
https://www.youtube.com/watch?v=knmP4Bp7SPI&feature=youtu.be
ultimatevacatio
Answered Feb 20, 2018

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