FTHB - bought from estate

[cathyan]

I've been reading all morning and haven't the answer to this one.

I know you can't claim the FTHB if the home is bought from a close relative, but what about from the estate of the deceased parent?

The house was to be sold to pay off bills, and (if) any remaineder to be split among siblings.

I'm thinking no, but client declined anything from the estate for the right to buy the house for full value.

[jainen]

>>I've been reading all morning<<

What have you been reading? In my opinion, Section 36 is quite clear about the definition of related persons when it refers to Section 267, which says that an executor of an estate is a related person to a beneficiary of that estate. I suppose you could construct an argument that your client was not a beneficiary because he disclaimed all interest, but I wouldn't be comfortable with that unless you could support it with a court ruling or two.

[cathyan]

But I did come across the following, and had the question of estate as opposed to trust.

"Section 267 does not bar a deduction of loss on a sale of property other than stock by an estate to the estate's executor, who was a child of the decedent. The sale was not betwwen related parties within the meaning of Sec 267(B ), but between an estate and an individual." (Stanley & Kilcullen's Federal Income Tax Law, 1997)

If she could receive it from the estate, and have the loss, is a decedent's estate different from a trust?

[jainen]

>>the estate's executor, who was a child of the decedent<<

I'm sorry. I did not understand the executor bought the property. As I read the original post, we were talking about a beneficiary. In other words, the related person rule is not about the decedent. It's the estate and ANY beneficiary.

[cathyan]

Client just faxed over more paperwork on the sale, and the father put everything into a trust and his will did not revoke the trust. So... no FTHB for them. I might have tried it f it were an estate, not family trust. Thank you for your thoughts on this, though.