Will my home sale proceeds be taxed?

[SteveJ57]

We are selling our home which is titled in the name of our living trust. My wife and I are the only beneficiaries. The proceeds must be wired to a trust account, rather than to our personal account. The exemption for primary home sale proceeds is $500k for filing jointly, but since the proceeds must go through the trust account, does this change the applicability of that exemption?

[tagteam · Accepted solution]

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@SteveJ57 wrote:
.....since the proceeds must go through the trust account, does this change the applicability of that exemption?

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No, it does not change the applicability of the exemption per Section 1.121-1(c)(3).

See https://www.law.cornell.edu/cfr/text/26/1.121-1

[SteveJ57]

Thank you! This is SO helpful. Another question if I may: I need to establish a TIN for the trust account (never had an account for it before this). The IRS website has a form to do this rather painlessly (see https://sa.www4.irs.gov/modiein/individual/index.jsp), but I want to make sure that I use the correct type. This is a revocable living trust, so I intend to use the "Revocable Trust" path, rather than the "Trust (All Others)" path. Is this correct?

[tagteam]

Yes, select that option if the trust is a revocable trust (aka living trust - grantor trust).

[SteveJ57]

Thanks again! So helpful.