Tax Implications of Selling a House in a Trust Complete Guide

Can I Sell My House if It Is in a Revocable Trust? Yes, you can. If your home is in a revocable trust, you are still in control of it. This means you can sell it whenever you want, just like a regular homeowner. A revocable trust is a legal way to manage your assets, but it doesn't take away your rights to sell your home.

The main difference is that the home's title (the legal paperwork showing ownership) is in the name of the trust, not your personal name. So, when you sell the house, you will sign papers on behalf of the trust.

How Does Selling Work?

Selling a house in a revocable trust is mostly the same as selling any other home:

1. You find a real estate agent (optional).
2. You get the house ready and list it for sale.
3. Once you find a buyer, you handle the paperwork using the name of the trust.
4. The money from the sale goes into the trust’s account or wherever the trust allows.

Tax Rules for Selling a Home in a Revocable Trust

For tax purposes, the IRS treats you and your revocable trust as the same person. So, the taxes on the home sale work just like they would if the house were not in a trust at all.

Will I Owe Capital Gains Tax?

Possibly—but maybe not. Here’s how it works:
• If the house was your main home for at least 2 of the past 5 years, you can exclude a large portion of your profit:
o Up to $250,000 if you’re single.
o Up to $500,000 if you’re married and file taxes jointly.

If the house were bought for $200,000 and sold for $500,000, the gain would be $300,000. If married, you could avoid taxation on up to $500,000. Thus, in such a case, there would not be a capital gains tax.

But if it was not a primary residence altogether, or the gain exceeds those limits, the amount above that may attract taxation.

How Do I Report the Sale?

You report the sale on your regular tax return, using a form called Schedule D and another one called Form 8949. You list how much you paid for the house, how much you spent on improvements and selling costs, and how much you sold it for. That shows your gain or loss.

What If the House Is in an Irrevocable Trust?

This is a little different. If the house is in an irrevocable trust, you no longer have control of it. The trustee (the person managing the trust) would be the one to sell it, not you.

Taxes in an Irrevocable Trust

In most cases, the trust—not you—pays any taxes on the profit. And tax rates for trusts can be higher than for individuals. If the money from the sale is given to the people named in the trust (the beneficiaries), then they may owe taxes instead.

Also, if the person who created the trust passed away before the house was sold, the cost of the home may get updated to its market value at the time of their death. This could reduce how much tax needs to be paid when it’s eventually sold. That’s called a “step-up in basis,” and it can help lower taxes.

Steps to Sell a House in a Revocable Trust

If you’re ready to sell, here’s what to do:

1. Check the Trust Paperwork
Make sure the trust allows you to sell the house.

2. Talk to a Real Estate Attorney (Optional)
If you're not sure what to do, a lawyer can help review your trust and guide you.

3. Prepare the Home for Sale
Clean, repair, and stage it just like you would any other home.

4. List the Home
Use a real estate agent or list it yourself.

5. Sell and Sign Documents as the Trustee
Make sure all paperwork uses the name of the trust, not your personal name.

6. Deposit the Money
Put the money from the sale into the trust account or your personal account if allowed.

7. File Taxes
Report the sale on your personal tax return and include any gains or losses.
If you are wondering “can I sell my house If It Is in a revocable trust?”—the answer is yes, and it is often just as simple as a regular home sale. The taxes work mostly the same, and in many cases, you can even avoid paying capital gains taxes if you qualify.

Just make sure you handle the paperwork correctly, especially using the trust’s name, and talk to a professional if you're unsure. That way, you can sell your home smoothly and avoid surprises during tax season.