Do I Have to Pay Tax On A House That I Inherited
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- เผยแพร่เมื่อ 3 ก.ค. 2024
- When you inherit a house, you may or may not have to pay taxes on the house when you sell it. It will depend on how the house was titled before the house passed to you as the beneficiary of the estate. This video will review the step-up in basis rules and strategies that you can implement to avoid having to pay tax on a property that you inherit, and how having a house owned by a trust can both protect the asset from a long-term care event and allow the house to pass to teh beneficiaries of the estate tax free.
Contact Michael Ruger with Questions: 518-477-6686 or mruger@greenbushfinancial.com
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#inheritance #estateplanning #taxplanning #financialplanning #greenbushfinancial
What if the property is overseas? out side of the country. I assume there is no step up basis. correct?
Great vido. Client received a 1099-S for inherited property. I can complete Form 1099-B/8949. Do I add INHERITED to the description or is there anything more I need to do?
I thank you for this video. I love the questions that have been asked as well. I am holding on to my mothers home and my question is pertaining to CA taxes. Now after reading watching videos. I would not have to pay federal or estate taxes because I am FAR below Federal: 11.4M and Estate: 3.5M. Is my understanding right. I refuse to sale my memories very adament when it comes to keeping the home
If the estate is under the 11.4M federal estate tax limit then yes, you would not have a federal estate tax liability. California is one of 38 states that currently does not have an estate tax at the state level. (Comment is for education. Not advice)
If I could afford it, I would keep my mom's house as a shrine to her because I want to hold on to everything of hers. She has nothing of value but everything of hers has sentimental value to me. Its the only reason I'm trying so hard to hold on to her house, I'll kill myself trying to earn the money necessary to keep up all the payments on the house. If I have to donate/throw away my mom's personal belongings that she's spent her lifetime collecting it will be just like her dying in the hospital all alone again and I don't' think I can take that
My siblings and I (5) inherited the home our mother owned. She died in 2016. We kept the home for almost 2 years while we were upgrading it to sell. It was sold in 2019 for $115,00.00. We spent $23,190.00 on repairs and upgrades. How does the cost basis work on this type of transaction? The Fair Market Value (FMV) of the home at death was $62,000.00.
To obtain your cost basis, you add the fair market value of the house as of the date of death to any capital improvements that you made to the property. Based on your fact set, the cost basis in the property would be $85,190 so if you sell the property for $115k, it will result in a long term capital gain of $30k. (Comment is for education. Not advice)
@@greenbushfinancialgroup Is this split 5 ways since it was inherited by 5 persons?
S H yes. Split evenly 5 ways (Comment is for education. Not advice)
Good video. I learned something new. I hadn’t even heard of “irrevocable trust” until now. I have two questions -
(1) step up in cost basis upon inheritance only for family members (spouse, siblings, children)? If I die and in my will I leave things to my nephew/neice or a friend …. do they get step up in cost basis?
(2) I understand “long term health care event”. But not sure how it can affect the house? I am not old enough to know it first hand. Does it mean hospital or someone can claim your house in exchange for health care fee? If I have a will prepared in which I am leaving my house to someone, how can “long term health care event” affect that?
Thank you again for the video.
Question number 1: The step applies to anyone, not just family members.
Question number 2: State have different rules and counties within states can even have different rules when it comes to Medicaid. In NY the primary residence is not a countable assets for purposes of Medicaid eligibility but some counties will put a lien against the estate, meaning they can make you sell the house while you are still alive, but as soon as you pass, they place a lien against the house for everything Medicaid paid for your care. (Comment is for education. Not advice)
@@greenbushfinancialgroup thank you so much for quick response. This clears a lot. Definitely worth looking into irrevocable trust then.
Thanks for the video. My situation is slightly different. My brother and I inherited
our dads house when he passed in 2013. My brother has lived in it since 2015. He is moving out and we want to sell the house. I have no idea what the house was worth at the time of death(2013). However the house is in desperate need of repair. We will probably sell the house well below current market prices. Will we need to pay taxes on the sell? We are in Georgia and the house is too. I believe the sell will be less than my dad paid originally. Thanks in advance.
It still goes back to what the house was worth on the day he passed away, plus any capital improvements that your brother made to the house while he was living in it from 2013 until today. That is your cost basis. If you end up selling the house for less than that amount, you would actually have a carry forward loss that can be used to offset future capital gains. (Comment is for education. Not advice)
How can I find the FMV of a house at the time of death if there was no appraisal done? Can I use real estate comps?? Need that number to calculate my capital gains tax.
You are suppose to get a formal appraisal but you decide instead to use your own real estate comps for the FMV, you just have to be comfortable that the value is reasonable if you were ever audited by the IRS. Keep records for your real estate Comp findings or the appraisers report. Just a note, getting an appraisal is usually pretty cheap. (Comment is for education. Not advice)
When is the Step up Basis established if the property is placed in an irrevocable trust?
The step up in cost basis happens after the grantor of the trust passes away (Comment is for education. Not advice)
"If I sell the house the next day for $300,000."
So you're saying that you are only taxed when you SELL it, but not when you INHERIT it?
What about when you refinance it?
My father passed, but I can't find the original will, and I can't afford a massive income tax. Can I go ahead with the probate process anyway?
It is worth less than 5 million and I assume my mother would inherit, but she has dimentia.
What if I want to keep the house and not sell it? All of the videos I’m seeing are about how to sell and making money off of it. Maybe your next video can address that! My grandmother told me a few months ago I’m in the will for her house and has since then been diagnosed with a terminal illness so I’m trying to get all my chicks in a line before I don’t have anymore time!
If you inherited the house and plan to keep it, there is no tax event that occurs. You can live in the house or rent it. If at some point you sell it in the future you still received the step up in cost basis which will be the value of the house on the day your grandmother passed away. If you have more question, please feel to contact me, mruger@greenbushfinancial.com (Comment is for education. Not advice)
Hey Taylor, I am living the same situation as you, well not really. My mother has passed and I am keep the home in California. You will have to go through probate because the will means nothing to be honest. Probate will allow you to present the will but you would still have to do the court process like myself!. If you need help or guidance because you want to keep the home I can share with you the knowledge ive acquired. Blessings to you and your grandma. I miss my mother everyday that is why I refuse to LOSE IG acct: ACL_Movement
Hope she good brother, allodial title that will help you out totally but do ur homework on it and you will... will be blessed 😉
@@aclmovement My condolences :(.... I know how you feel... I miss my mom every day. It's been a month and I still can't accept that my mom is gone. I would give anything but my oldest brother wants his cut and my other brother and I cant afford to buy him out.. It's been nothing but bad since my mom got covid. She was fully vaccinated and never got sick, I totally thought she would be coming home. :""(. hugs to you and hugs to you too, Taylor.. and your grandma.
I inherited a home from my father in 2009 that he had paid off. At the time of my father's death the home was valued at $650,000. I never lived in the house and the house was never rented out. Recently a portion of the house was flooded. As a result extensive mold damage has occurred. I don't have the money to have the home repaired so I decided to sell the house "as is" for $225,000. Will I still have to pay capital gains tax for the sale of the house?
You would not have to pay any capital gains tax because you would actually have a realized capital loss when you sell the house since the value had decreased since the date of your father’s passing. You can carry forward that capital loss to offset capital gains in the future. (Comment is for education. Not advice)
Hey man. Great video. I do have some questions though.
In 2020 my father passed away and did not have a will. He was married to my step mom and by law she received a Life Estate. Me and my brother filed probate against her in the event something happens to her. She passed about a month ago and we got the house and sold the home. Would be still be eligible for a step up basis? Are we required to pay capital gains tax? Is this considered an “inherited” property still? Any advice you could give would be much appreciated. Thank you!
If your father did not have a will, this gets into the estate laws of the state that he resided in. The other factor is how the house was titled prior to your father passing. Since there is not a straight forward answer, feel free to call me and I can ask some additional questions to arrive at an answer to your question 518-477-6686 (Comment is for education. Not advice)
On an inherited home, if the basis at time of death is X and the home sold for X with a $10,000 commission and $1000 closeing cost is there a $11,000 capital loss?
Yes, if you inherit an asset worth X and then you sell it for a loss, you can ulitlize the realized loss. (Comment is for education. Not advice)
My mother added 3 sons names to the house seven years ago she lived in the house by her self till her passing this year house at time was worth $525,000 house be sold now at that price can the sale use a stepped up basis to avoid tax
If the owners of the house were your mother and the 3 sons, technically each person would be 25% owner of the house. Only her 25% share of the house would receive a step-up in basis. The three sons would have inherited her cost basis in the property and do not receive a step up. (Comment is for education. Not advice)
I inherited a house in 2017 and rented it out and have taken a loss on it every year and I am looking to sell it and will probably sell it for around 230k, and I owe 100k on it I am not married and have not lived in it this is in California what kind of taxes I would be looking at?
Mike Conley if you depreciated the house while it was a rental Property you will have to re-capture that depreciation as long-term capital gain when you sell the property. So your cost basis in the property Is the value of the house when you inherited it minus any depreciation you took against the property. (Comment is for education. Not advice)
Greenbush Financial Group & Money Smart Board Thank you. I appreciate your help!
Question: my mother passed away in 2020, she had a life estate. We lived together, in the house and she left the house to me. I'm planning on living in the house my entire life. Do I have to an pay inherits tax?
If your mother passed away, you inherited the house through her estate, and you never plan to sell it, it would not trigger a tax event. (Comment is for education. Not advice)
@@greenbushfinancialgroup That what I thought. Thanks for your quick response.
$3,000 to $6,000 to set up a revocable living trust? I don’t know about that.
It doesn't cost that much. My mom had one set up for $500... just be sure it's updated as properties are bought and sold etc. .. And make sure to put some money aside so that there's cash to use once everything gets frozen because in order to settle, it. cost money to lodge the will at the court, to submit a request to be executor, lawyer consultations, etc If no property, just accounts with money in them,, assign PODs to each account
🙏🙏🙏🙏
What if the house is in central America do I pay taxes here in the usa when I sell the house? The house is less than 50k
I’m not sure how the international tax rules come into play. If there are any tax professionals reading this, please list a comment below. (Comment is for education. Not advice)
@@greenbushfinancialgroup Thank you! For replying
Why should you have to pay taxes to the US, it's none of their biz what you have going on elsewhere. Id think you just have to worry when you see those caravans of Suburbans rolling through
Do I pay taxes if I’m a friend
Regardless of your relationship to the decedent, if the asset was included in their estate you receive a step-up in basis. (Comment is for education. Not advice)
What about the $250K tax exemption you get if you live in the house as your primary residence for 2 years? I'm being told to get an appraisal to ensure the fair market price isn't too low so that I won't have to pay taxes on the gain in two years but I can't imagine a property gaining more than the exemption amount
If the capital gain in the house is nowhere near the $250,000 limit and you qualify for the primary residence exclusion, you may not need to get an appraisal. If you’re going to be close to the limit, then an appraisal might be warranted. But remember the 250,000 is the amount of the gain, not the sales price. (Comment is for education. Not advice)
@@greenbushfinancialgroup Okay, then....makes sense to me. Unless it's not in the trust and in that case, an appraisal would be neccessary in order for them to sell it so the probate court and lawyers can get paid.
How about if the house is assessed higher than appraised