How will I be taxed on my inheritance by the state and IRS?

Question

I am geting $105,000.00 from the sell of my parents home,how much tax will I owe

I live in California

Answer 1

That depends. If the house was sold by the estate and you received the proceeds there is no Federal tax due from you. A few states do still have an inheritance tax (not to be confused with estate taxes!) but those are often paid by the estate on your behalf. Check with the executor of their estate on that.

If you received the home through probate, your cost basis is the value of the home on the date of your parent's death. It is NOT their basis in the property as another poster stated! You could have a taxable gain if you sold the property for more than that value.

If you lived in the home as your principal residence for 2 of the 5 years immediately prior to the sale you'd qualify to exclude the gain from any tax. The exclusion amounts are $250,000 if your filing status is Single and $500,000 if Married Filing Jointly.

Answer 2

Inheritances are taxed on the estate, not the recipient. However, with the home, your basis in the property is your parents' basis in the property. Also, the holding period carries to you as well. Therefore, if you sell the home, you are taxed on the gain on the sale. The amount of gain is the difference between the selling price and your parents' basis in the property.

Answer 3

To the feds, no inheritance tax. To the state, depends on what state you're in.

Answer 4

0 to the IRS unless the gross estate is over $1M dollars. The state tax depends on what state you are in.