Ohio Couples Can Use Tennessee Trusts for Rental Property Tax Benefits

Ohio couples who place rental property into a Tennessee community property trust may reset both spouses' cost basis to the current market value at the time of the first death, according to reports from aol.com. This mechanism allows the whole asset to take a fresh basis for tax purposes. In contrast, a jointly owned rental in Ohio typically only receives half a step-up in basis when one spouse dies.

The ability to reset the cost basis could potentially wipe out most of the capital gains tax built into older rental properties. This differs significantly from the standard tax treatment for jointly owned property in Ohio, which only allows for a partial basis reset.