From 24/7 Wall St. · David Beren · · 1m 30s
Ohio Trust Resets Rental Tax Basis
Ohio couples can reset rental property tax basis to current value when first spouse dies via Tennessee trust.
In brief
Ohio couples can reset rental property tax basis to current value when first spouse dies via Tennessee trust. Ohio couples using Tennessee community property trusts reset rental property tax basis to market value when first spouse dies. Originally reported by 24/7 Wall St..
Ohio Rental Tax Reset
A single trust document signed in ohio could legally erase decades of capital gains tax baked into a rental property.
1988 Purchase Example
They bought a rental in 1988 for $110,000 but the tax reset happens when the first spouse dies.
How It Works
When the first spouse dies, the trust splits assets: one half treated as deceased spouse's share and one half as surviving spouse's share.
Tax Reset Benefit
The trust resets the basis for both halves to fair market value at death, eliminating capital gains tax on appreciation.
Tennessee Trust Rule
Tennessee became the second state to let couples opt into community property through a trust in 2010.
IRS and Legal Risks
The IRS has never tested these trusts and a 1944 Supreme Court precedent could block the tax reset.
Who Benefits
This works for married couples with appreciated assets like rental properties but not for retirement accounts or life insurance.
Setting Up the Trust
Hire an estate attorney to draft a trust that declares it a tennessee community property trust with both spouses signing.
The one thing
Ohio couples using Tennessee community property trusts reset rental property tax basis to market value when first spouse dies.
