My grandfather and mother live in North Carolina and hold a 5 unit rental property in trust in California worth around $4M. The property has been paid off. When my grandfather passes, will my mother owe a significant tax bill on the property despite the trust being in place? We are thinking of doing a 1031 exchange on the property since upkeep is too much work for her. I am wondering about purchasing a new investment property with a partial down payment (and thus incurring debt), would this debt offset the taxes owed when he passes?
Thank you for any help!
