do you have to pay inheritence taxes if a house is willed to u and u sell it/?or it must be gift in the will?

Question

i heard if a house is willed to u u must pay inheritence taxes?? someone said if it is put in the will as a gift to u then u dont have to pay taxes?? which one is correct???? if there is a brother and sister and mom has no will do we still get everthing devided equal to us or does the state come in and try to take everything?? ive heard several answers? does anyone really know?? please help?

Answer 1

If you inherit a home and then sell it you may have to pay tax on the gain on the sale. The gain is the difference between the cost basis and the sales price. Your cost basis is the value of the home when the bequestor died so if you sold it quickly there would be no gain on the sale and therefore no tax.

Any estate taxes are levied on the estate, not you. If the estate is worth less than $2 million there won't be any Federal estate tax. Some states still have an estate tax and that would be treated the same way. A very few have inheritance taxes which are payable by the beneficiary but the estate usually pays those for you.

If the decedent died without a will, the estate would be divided according to state law. If the only heirs were 2 children they would generally split it evenly. If there were other potential heirs such as parents, brothers and sisters, etc., state law would apply; you should consult with an estate attorney for guidance on that. They ONLY time the estate would pass to the state would be if there were NO heirs at all that could be found. Even then, the state would only be a custodian until an heir could be found (in most cases).

Answer 2

there are 2 different issues: inheritance tax and tax on gain from sale. You as a person who inherited the house are not liable for inheritance tax. Deceased person or his eastate is liable for paying this tax. If you sell the house, you have to calculate if you had any gain. That is if you sale price after all expenses is higher than you cost basis. The cost basis for your house is determined as fair market value on the day of the death of the person who left you this house. If you donated the house, the basis of the donation is the same as if you were selling it. Of course you can devide all of the above said gains or donations based between people who inherrited the house

Answer 3

You really should contact legal aid and get answers formatted to your specific questions. As a general rule under the Uniform Probate Code there is no tax on an estate under 600,000 (this may have increased in 2007). The house becomes yours. If you sell it you would only pay tax on the gain; example-if the house had a value of 150,000 when you inherited it and you sold it for 175,000 then you would have a taxable gain of 25,000 that you would pay taxes on. Conversely, if you sold it for 125,000 then you would have a capital loss of 25k that you would take off against other income. It there are two children then by law each would receive 1/2 of a mother's estate; three children 1/3. The state does not come and take everything; it is divided as decreed by law to the heirs. If a person dies with no heirs then an estate escheats to the state in which the person resides.

Answer 4

I would go in person to your local County Courthouse and see the County Tax Collector-Assessor's Office. Explain the situation and they will be able to answer your questions more clearly.

Answer 5

go to your attorney as each case may be different