My mother and I own a house together, but the mortgage is only in my name. If she dies will I have to pay an inheritance tax on her half of the house? The house is in Maine (don't know if that matters).
2007-03-15 07:51:38 · 10 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Why not have her do a deed of gift into you and have her retain what is called a "Life estate" that would allow her to guarantee her right to interest in the property untill her death, at which time it would pass to you without having to involve probate.
Check with a local atty; not a big thing to do.
2007-03-15 07:55:55 · answer #1 · answered by wizjp 7 · 0⤊ 1⤋
The mortgage doesn't have anything to do with it -- it's just a loan. What matters is how the property is titled. If the title says you and mum are JTROS (joint owners with right of survivorship) - very common - then when mum passes, you will be the sole owner and the property does not go through probate. The basis price of the house will be "stepped up" by reason of mom's death - and no, there is no tax. Then, when you sell, the first $250k profit is not taxed either unless you have depreciated the property in prior years. And, by the way, inheritors do not pay inheritance tax. If any is due, it is estate tax and paid for by the estate, not the recipient. (other rules apply to 401k money, but that is too far afield)
2007-03-15 09:02:36 · answer #2 · answered by Jbb 1 · 0⤊ 0⤋
The life estate is a bad idea because then she's going to owe gift taxes now. Who is paying for the house? The IRS is really into substance over form on Estate Taxes, so if you are paying all of the mortgage and her name was only on the deed for paperwork reasons, you shouldn't owe. Maine is a different story. Most states have what is called a pick-up tax that "picks-up" what the Federal exemptions don't collect. One good idea is for her to start giving you a percentage of the house each year up to the maximum gift tax exemption. In 2006 that exemption amount was $12,000.
2007-03-15 07:59:48 · answer #3 · answered by Heidi 2 · 0⤊ 1⤋
How can you both own the house if you are the only one on the mortgage? Is her half paid off already or something? If the house is in your name you should not have to pay anything. But if she is considered part owner you will have to pay something for her portion.
2007-03-15 08:03:50 · answer #4 · answered by Ammo C 3 · 0⤊ 0⤋
Not a tax expert, but I did stay at a .....
I don't believe you will get taxed. You already own the property (by way of the mortgage).
Capital gains tax kicks in when you make more than $250K in profit (capital gain) on the sale. ($500K if married).
But I'm am not certain, consult a tax attorney or CPA - this is the sort of thing you don't want to screw up.
2007-03-15 07:58:07 · answer #5 · answered by Sam Fisher 3 · 0⤊ 1⤋
the house has to go through probate first,
the house taxes will be due, but no
you wont have to owe inheritance tax on a house
2007-03-15 07:53:55 · answer #6 · answered by Laura G 3 · 0⤊ 0⤋
I believe you wont be taxed unless your mother's share of the home is valued at over $2 million.
2007-03-15 07:55:54 · answer #7 · answered by Anonymous · 0⤊ 0⤋
the tax only kicks in at 5 million or so.
2007-03-15 07:53:26 · answer #8 · answered by Anonymous · 0⤊ 0⤋
DEPENDS ON THE AMOUNT AND THE STATE
IN SOME STATES ANYTHING OVER 1000 IS TAXES BUT CHECK YOUR STATE (OF INHERITANCE) GOOD LUCK
2007-03-15 07:54:06 · answer #9 · answered by Juleette 6 · 0⤊ 0⤋
its america, im sure youll have to pay something!
2007-03-15 07:54:29 · answer #10 · answered by hamm42 2 · 0⤊ 0⤋