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| *Loan,banking and credit>>>inheritance tax |
Do I have to pay taxes on an inheritance? |
A portion of the inheritence is from the sale of the deceased's condo, which although brand new, sold for less than what the deceased payed for it. The IRS instructions are fuzzy in this area, or I'm just a little slow. No you would not have to pay taxes on an inheritance. Any taxes would be "estate taxes" and they would be paid through the estate. What you inherit you would not pay taxes on. The only exception to that would be if you inherited an IRA, but that's not the case here. And actually, in this case you might end up with a deductible capital loss, depending on whether the decendent lived in the condo or if it was a condo the decendent rented out. There is no income tax on inheritances. There is an estate tax which is paid on some estates. This tax is paid by the estate. 16 years experience as tax professional and Enrolled Agent I have been a tax accountant for 27 years. What seems a simple question may be illusively complex. An inhereritance is never taxed to the beneficiary. If an estate is large enough, there may be an estate tax due. But, there may also be an estate tax due even on smaller estates when the lifetime unified estate and gift tax credit has been diminished or used up due to taxable gifts being made prior to death. As far as the apparent loss on the sale of the condo---the tax effect and treatment will depend on the tax basis of the condo and whether there were prior gains deferred on previously owned properties under the "old" replacement rule (which is still in force today, but applies only to the sale of high-dollar principle residences). In most instances, a loss on the sale of the condo would not result in a deductible loss (e.g. on a personal return) in any event, but it might be used to offset other capital gains were an estate return required. Did the estate have title and sell the condo and then you received the proceeds from the sale? If so, then there is no tax due on the money you received. If you received title to the condo and then sold it, your basis for the sale is the fair market value on the date of death or date (within six months of death) as determined by the executor. You cannot claim the difference in purchase price and the fair market value as a loss. However, your transaction costs will result in a loss. If you personally used the asset, the loss from the transactions costs cannot be claimed. If you did not use the asset and did not rent it, then this loss would be claimed on Schedule D as a long-term capital loss. If you used the condo for business purposes, the sale would be reported on Form 4797, using the basis as described above. In general, the estate or the value of the deceased's value in personal property including real estate, pays the tax, not the recepient. No, you do not pay taxes on this inheritance. Whether the real estate sold for less than its cost, is not relevant. Dont worry - be happy! |
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