Life Estate - captial gain tax

[L.S.]

Who pays the capital gains on a sale of real estate in life estate? The life tenant, remaindermen or both???

Thanks

[mcb39]

Who pays the capital gains on a sale of real estate in life estate? The life tenant, remaindermen or both???

Thanks

I believe if it is homestead property and the life tenant is still alive, the remaindermen would pay on their share. If it is not homestead property, they all pay.

[kcjenkins]

If the life tenant has the right to sell, and to keep all the proceeds of the sale, then he/she pays the taxes, as the 'remaindermen' get nothing, so owe nothing.

If the sale proceeds are split between the life estate holder and the remaindermen, then the gain is split between them, also, in the same percentages. It all depends on how this was set up, and that's why in cases like this, it is best to check with the attorney who set up the life estate, or at a bare minimum, READ THE PAPERWORK YOURSELF. Do not just take the word of the client, because even if they are trying to be totally honest, they often just do not understand the fine points that can make the difference.