Discussion:Real Estate Trust
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Discussion Forum Index --> Tax Questions --> Real Estate Trust
| 22 June 2007 | |
| Hi All:
As a preface, I am not an expert with respect to creating trusts, etc., and estate planning, so I thought I'd get some feedback on this question. I have a client who owns a 4 unit rental building. Client has gifted 50% ownership of the building to his girlfriend. The original intent was that girlfriend would also assume 50% of the mortgage (which, when refinanced, would approximate 100% of the value of the building). Building is probably valued at $375k or so. Refinancing did not occur. Client would like to put the building into a Real Estate Trust (assumed revocable) with 50%/50% of income and expenses going to both Client and girlfriend via a Trust K-1. There are several questions I have here - first, what is the tax impact of gifting 50% of the building to girlfriend. Obviously, we can do a gift tax return and use up a portion of the unified credit...and pay 0 gift taxes. Second, the real estate trust - is it just as simple as starting to file a 1041 (with legal docs., new TIN, etc.) and have the basis in the real estate carry over? Any thoughts, ideas are welcomed! Thanks in advance. | |
| 22 June 2007 | |
| what would be the purpose of using a trust instead of an LLC? What legal consequence does he want to have happen? | |
| 22 June 2007 | |
| There's a story behind a story here...the idea of giving up half ownership was that girlfriend contributed money to another business venture. I understand that either the trust or two person LLC will have the ability to pass through income and expense. Right now, one of the goals is to have the K-1 (trust or llc) pass through some real estate losses. Girlfriend has W-2 income that can use the losses. Client has no other current income other than a loss from the start-up of the business venture. So...I'm not sure if it matters whether it is a Trust or an LLC, except on the contribution of the property... | |
| 22 June 2007 | |
| If this were not a grantor trust and capable of issuing K-1's the passive loss would be trapped at the entity level, not distributed. ♫ | |
