Tax implications of being "bought out" of a percentage of a realty trust
January 24, 2013 1:11 PM Subscribe
My two sisters and I were equal beneficiaries in a realty trust. This past year, my older sister bought my 1/3 share (as well as that of my sister.) According to the legal documents, it was a "transfer of beneficial interest". Other than signing and notarizing the documents to transfer the real estate share, nothing else official occurred and my sister just paid us our fair share of the assessed market value. She is not planning on reporting the transaction. I have no idea if I owe taxes on the money I've received (and will also be receiving this year - it was divided into a few payments) and if so, what kind of tax that might be.
posted by nekton to Work & Money (10 answers total) 2 users marked this as a favorite
I have tried to do some research about this but have only ended up more confused. From what I've gathered, it's not a gift because my sister received something in return. It might just be regular income. It also might be assessed a state tax of some sort, like the Massachusetts (my state) Deed Stamps/Transfer Tax that has to be paid when you sell real estate. Regardless, the more I read, the more confused I get. I know YANMTA (you are not my tax accountant) but some guidance would be great.
I also need to note that my taxes will be done by a professional, but I'd like to walk in there with some sense of whether I need to mention that I received this money and prepared for the event that I might owe taxes on it.