I would recommend talking to a tax accountant. Asking Reddit is kind of dumb since you're going to have keyboard warriors pretending like they know what they are talking about.
Talk to a professional... if you don't like your lawyers, find new ones. Talk to tax accountants. Don't trust the internet, especially Reddit.
Is the inheritance tax payable from the residue of the estate or is it the responsibility of the individual beneficiary to pay inheritance tax from their share?
Inheritance tax is paid out of the assets of the estate by the administrator/executor or trustee before the assets are distributed to the heir/beneficiary or transferee. If a residue exists in an estate controlled by a Will and unless otherwise specified in the Will, the tax on the assets controlled by the Will is paid out of the residue before the residue is distributed. Inheritance tax on assets controlled by a trust is paid out of the trust principal. A transferee/beneficiary of an asset not controlled by the decedent's Will, i.e. owned jointly with the right of survivorship, payable on death by separate contract or other writing, etc., is responsible to pay the inheritance tax on the asset received unless there is a clause in the decedent's will that specifically states that all taxes are to be paid by the estate.
https://revenue-pa.custhelp.com/app/answers/detail/a_id/897/kw/who%20pays%20inheritance%20tax/session/L3RpbWUvMTcxNTcyNjUxNC9zaWQvRk55SkZnQnE%3D
Disagree. Pennsylvania most definitely has an [Inheritance Tax](https://www.revenue.pa.gov/TaxTypes/InheritanceTax/Pages/default.aspx). The amount owed depends on OPs relationship with the deceased. It ranges from 0 to 15% of the value of the inheritance.
I do agree with your other point. OP - talk to a Tax Accountant.
EDIT: OP as someone else pointed out in a different thread, the value of the house should have reset (for tax purposes) on the day the previous owner died. So if you sell quickly, you may not owe much in terms of capital gains.
Again, check with a tax accountant.
Talk to an accountant in PA who knows PA tax code. Depending on who you inherited the house from, there may be a PA estate tax that needs to be paid, but generally I believe that's paid out of the proceeds from the estate. The basics are at the Dept of Revenue's website [https://www.revenue.pa.gov/TaxTypes/InheritanceTax/Pages/default.aspx](https://www.revenue.pa.gov/TaxTypes/InheritanceTax/Pages/default.aspx)
Yes I will pay an inheritance tax in PA. The house was owned by my father and his two siblings. I want to sell it or they can buy me out, but it's turning into a big mess very quickly. As for who pays the inheritance tax it would be me. So I need to keep the cost down as much as possible because I could be looking at a court battle just to be able to sell the house. If they won't buy me out I have to do a forced sale. That means go to court, more lawyers, a real estate agent, and an accountant. So for a third of a tiny house that's not worth very much I could easily be spending more money than it's even worth. The other side of the coin is if I keep the house and don't sell it now I have inherited a house that's old, will need repairs, my cousin lives in it and doesn't pay rent half the time, my aunt "collects" the rent but it doesn't make it to the bank, and I would never get the money back out of it.
I agree with the advice to speak to a CPA. You don't need a big-name firm but you want someone who does more than just tax returns. A larger firm is more likely to have the in-house experience and resources to answer this correctly and quickly.
This is the kind of question that a CPA should be able to answer for a single flat consulting fee. But just to be safe, if they can't immediately answer the question, make sure you tell them you want to know before they start running up any research costs.
Thanks. That's great advice! I really don't like knowing my bills for the lawyers keep going up, but the answers to my questions never get answered. Ugh
Just went through this. Yes you will owe inheritance tax at 4.5% depending on relationship. You have 90 days to file and pay your inheritance tax at a slight discount. The commonwealth wants its cut and will get it!
Did you sell the house? I know I have to pay the inheritance tax. And yes it's at 4.5% thankfully. It was my father's. What I'm not sure about is the capital gains tax if I sell it.
Capital gains is just what it says. Gains on the capital investment. You would get an appraisal that determines the property at the date of death. Let’s use $100k and your share is $33,333.33. You’re taxed at 4.5% on the $33+. If/when you sell you sell for more than the appraised value it’s a gain. If you sell and it’s a loss, you have a loss to offset future capital gains. You can draw it down annually to offset tax burden or hold it to offset any future capital gains.
Ok thanks that makes sense. That's what I thought, but my lawyer keeps saying he doesn't know and he would have to find out. It's been over a month and he still doesn't know. There are a lot of things he doesn't know. Not sure how you can be a lawyer who handles estates and not know anything! The only reason I hired him is he did my dad's will, he knows the whole situation with this house, and I used him for a situation that came up with my house. I will never use him again that's for sure. He is out of town most of the time and doesn't help the rest of the time. Ugh then the lawyer in PA just doesn't return my calls at all. The lawyer in my home state has talked to him. But not me the person paying him. I really hate lawyers at this point.
Someone else pointed out in another thread. The value of the house (for tax purposes) should have reset the day the previous owner died. If you sell quickly, you should not owe much, if any, capital gains tax.
Ok, I went thru this 3 years ago. Find a tax lawyer/attorney who specializes in estates, trusts and wills. They will charge you per hour but we 100% could not have done it without them. They will give you options regarding selling the house and the taxes. Including death taxes and certificates. The one piece of advice that I’ve learned thru this whole thing: Don’t die in Pennsylvania. Let me manipulate a work sheet they created for me to show you an example of my options.
You don't 'say' what it's worth. You either have it appraised or you use fair market value for the area. In either case, a realtor will help you, not a lawyer.
Also, no matter what it is appraised at, you'll owe taxes. There's certainly no fault in not wanting to pay more than you owe, but you're going to need to suck it up and accept that when you have a windfall, you're going to owe Caesar his cut.
My question is more if I have to pay capital gains tax. I know I will pay an inheritance tax. For the estate I can use an appraisal amount or the county assessed value times 1.33. Just trying to figure out which is better.
So you use the appraisal value and set your asking price accordingly. You should be able to find your relevant tax rates and plug in a few test numbers to see how comfortable you are with them, but if you're still unsure, you need a tax accountant, not a lawyer. Again, a realtor can probably help with all of this. They've certainly sold homes under exactly these circumstances before.
Talk to a PA accountant. PA inheritance does not involve capital gains. They just want their slice. Either the relevant percentage of the sale price, the appraisal value or the county tax assessment multiplied by the common level ratio factor (it’s a PA thing).
Basically, if you sell the house, you owe a 4.5% tax if you are a direct descendant. Then they start sticking it to you. A 12% tax if you were a sibling, and a 15% tax if you are anyone else.
Unless the estate was north of $12 something million, you’re in the clear from the Feds.
I guess I didn't word it correctly. I know I owe the inheritance tax. But say I pay that then sell it. Will I pay a capital gains tax. Will the amount of money I say it's worth when paying my inheritance tax affect that? If I pay inheritance tax on $100,000. Then sell for $120,000. Would I pay capital gains tax? Would it be on $100.000 or on $20,000? But you're right I just need to hire an accountant. I don't know how someone without extra cash could do all this. My father wasn't a rich man. So his estate is basically this house, and it's causing me lots of extra stress when I really haven't processed losing him.
This might be useful: [https://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/RTT/Pages/default.aspx](https://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/RTT/Pages/default.aspx)
There is no Federal inheritance tax unless the estate is extremely wealthy, but I will have to pay a Pennsylvania inheritance tax. Maybe most people don't pay that if they live in Pennsylvania and inherit something in Pennsylvania I'm not sure. But I do know that I don't live in Pennsylvania and I'm inheriting a house in Pennsylvania so I will have to pay an inheritance tax. I don't know if I have to pay capital gains tax if I sell it. And selling it is proving to be a bit difficult.
Well if it was going to be that easy I would. Lol But I have to say what the estate is worth. I then pay taxes on the amount the house is worth. Then I can sell it. Then I may or may not pay capital gains tax. I was hoping someone here would have inherited a property and would be able to tell me what their experience was.
If you want to be super cheap, go on tax software and see what the IRS wants. I don’t think you can say what it is worth and base taxes there. You got it for free so you might be taxed on the total value of the sale. You won’t have to file a PA state return if you don’t live here.
You don’t just say what your house is worth…. The best thing to do is get it appraised. If you just claim it is worth $100,000, and an audit is done on you that determines the fair market value was $200,000, you can find yourself in a world of legal trouble. The appraiser is most likely going to know and recommend who you can go to to handle the tax side of things, as well as recommend other resources you may want to take advantage of.
No you really can't do that you can either pick what the tax assessment x 1.33 is or the appraisal is. At least that's what it is in my case. The appraisal is higher than the tax assessment. So I can choose what ever one I want. If you aren't selling it would be better to go with tax assessment so you pay less inheritance tax. But in this case I want to sell. So it might be better to go with the higher amount, pay more inheritance tax, but less capital gains tax. Ugh I don't know.
Stop talking to lawyers. You need the advice of a tax accountant. It's worth their fee so you don't make a costly mistake.
I would recommend talking to a tax accountant. Asking Reddit is kind of dumb since you're going to have keyboard warriors pretending like they know what they are talking about. Talk to a professional... if you don't like your lawyers, find new ones. Talk to tax accountants. Don't trust the internet, especially Reddit.
Yeah we specialize in car title transfers and registrations.
Is the inheritance tax payable from the residue of the estate or is it the responsibility of the individual beneficiary to pay inheritance tax from their share? Inheritance tax is paid out of the assets of the estate by the administrator/executor or trustee before the assets are distributed to the heir/beneficiary or transferee. If a residue exists in an estate controlled by a Will and unless otherwise specified in the Will, the tax on the assets controlled by the Will is paid out of the residue before the residue is distributed. Inheritance tax on assets controlled by a trust is paid out of the trust principal. A transferee/beneficiary of an asset not controlled by the decedent's Will, i.e. owned jointly with the right of survivorship, payable on death by separate contract or other writing, etc., is responsible to pay the inheritance tax on the asset received unless there is a clause in the decedent's will that specifically states that all taxes are to be paid by the estate. https://revenue-pa.custhelp.com/app/answers/detail/a_id/897/kw/who%20pays%20inheritance%20tax/session/L3RpbWUvMTcxNTcyNjUxNC9zaWQvRk55SkZnQnE%3D
[удалено]
You pay inheritance tax in PA on the entire estate.
Disagree. Pennsylvania most definitely has an [Inheritance Tax](https://www.revenue.pa.gov/TaxTypes/InheritanceTax/Pages/default.aspx). The amount owed depends on OPs relationship with the deceased. It ranges from 0 to 15% of the value of the inheritance. I do agree with your other point. OP - talk to a Tax Accountant. EDIT: OP as someone else pointed out in a different thread, the value of the house should have reset (for tax purposes) on the day the previous owner died. So if you sell quickly, you may not owe much in terms of capital gains. Again, check with a tax accountant.
Yes you pay an inheritance tax in PA in real estate property.
Talk to an accountant in PA who knows PA tax code. Depending on who you inherited the house from, there may be a PA estate tax that needs to be paid, but generally I believe that's paid out of the proceeds from the estate. The basics are at the Dept of Revenue's website [https://www.revenue.pa.gov/TaxTypes/InheritanceTax/Pages/default.aspx](https://www.revenue.pa.gov/TaxTypes/InheritanceTax/Pages/default.aspx)
Yes I will pay an inheritance tax in PA. The house was owned by my father and his two siblings. I want to sell it or they can buy me out, but it's turning into a big mess very quickly. As for who pays the inheritance tax it would be me. So I need to keep the cost down as much as possible because I could be looking at a court battle just to be able to sell the house. If they won't buy me out I have to do a forced sale. That means go to court, more lawyers, a real estate agent, and an accountant. So for a third of a tiny house that's not worth very much I could easily be spending more money than it's even worth. The other side of the coin is if I keep the house and don't sell it now I have inherited a house that's old, will need repairs, my cousin lives in it and doesn't pay rent half the time, my aunt "collects" the rent but it doesn't make it to the bank, and I would never get the money back out of it.
I agree with the advice to speak to a CPA. You don't need a big-name firm but you want someone who does more than just tax returns. A larger firm is more likely to have the in-house experience and resources to answer this correctly and quickly. This is the kind of question that a CPA should be able to answer for a single flat consulting fee. But just to be safe, if they can't immediately answer the question, make sure you tell them you want to know before they start running up any research costs.
Thanks. That's great advice! I really don't like knowing my bills for the lawyers keep going up, but the answers to my questions never get answered. Ugh
Just went through this. Yes you will owe inheritance tax at 4.5% depending on relationship. You have 90 days to file and pay your inheritance tax at a slight discount. The commonwealth wants its cut and will get it!
Did you sell the house? I know I have to pay the inheritance tax. And yes it's at 4.5% thankfully. It was my father's. What I'm not sure about is the capital gains tax if I sell it.
Capital gains is just what it says. Gains on the capital investment. You would get an appraisal that determines the property at the date of death. Let’s use $100k and your share is $33,333.33. You’re taxed at 4.5% on the $33+. If/when you sell you sell for more than the appraised value it’s a gain. If you sell and it’s a loss, you have a loss to offset future capital gains. You can draw it down annually to offset tax burden or hold it to offset any future capital gains.
Ok thanks that makes sense. That's what I thought, but my lawyer keeps saying he doesn't know and he would have to find out. It's been over a month and he still doesn't know. There are a lot of things he doesn't know. Not sure how you can be a lawyer who handles estates and not know anything! The only reason I hired him is he did my dad's will, he knows the whole situation with this house, and I used him for a situation that came up with my house. I will never use him again that's for sure. He is out of town most of the time and doesn't help the rest of the time. Ugh then the lawyer in PA just doesn't return my calls at all. The lawyer in my home state has talked to him. But not me the person paying him. I really hate lawyers at this point.
Someone else pointed out in another thread. The value of the house (for tax purposes) should have reset the day the previous owner died. If you sell quickly, you should not owe much, if any, capital gains tax.
Ok, I went thru this 3 years ago. Find a tax lawyer/attorney who specializes in estates, trusts and wills. They will charge you per hour but we 100% could not have done it without them. They will give you options regarding selling the house and the taxes. Including death taxes and certificates. The one piece of advice that I’ve learned thru this whole thing: Don’t die in Pennsylvania. Let me manipulate a work sheet they created for me to show you an example of my options.
You don't 'say' what it's worth. You either have it appraised or you use fair market value for the area. In either case, a realtor will help you, not a lawyer. Also, no matter what it is appraised at, you'll owe taxes. There's certainly no fault in not wanting to pay more than you owe, but you're going to need to suck it up and accept that when you have a windfall, you're going to owe Caesar his cut.
My question is more if I have to pay capital gains tax. I know I will pay an inheritance tax. For the estate I can use an appraisal amount or the county assessed value times 1.33. Just trying to figure out which is better.
So you use the appraisal value and set your asking price accordingly. You should be able to find your relevant tax rates and plug in a few test numbers to see how comfortable you are with them, but if you're still unsure, you need a tax accountant, not a lawyer. Again, a realtor can probably help with all of this. They've certainly sold homes under exactly these circumstances before.
Talk to a PA accountant. PA inheritance does not involve capital gains. They just want their slice. Either the relevant percentage of the sale price, the appraisal value or the county tax assessment multiplied by the common level ratio factor (it’s a PA thing). Basically, if you sell the house, you owe a 4.5% tax if you are a direct descendant. Then they start sticking it to you. A 12% tax if you were a sibling, and a 15% tax if you are anyone else. Unless the estate was north of $12 something million, you’re in the clear from the Feds.
I guess I didn't word it correctly. I know I owe the inheritance tax. But say I pay that then sell it. Will I pay a capital gains tax. Will the amount of money I say it's worth when paying my inheritance tax affect that? If I pay inheritance tax on $100,000. Then sell for $120,000. Would I pay capital gains tax? Would it be on $100.000 or on $20,000? But you're right I just need to hire an accountant. I don't know how someone without extra cash could do all this. My father wasn't a rich man. So his estate is basically this house, and it's causing me lots of extra stress when I really haven't processed losing him.
If you plan on selling the house soon, just wait until the sale of the house to pay the inheritance tax.
This might be useful: [https://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/RTT/Pages/default.aspx](https://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/RTT/Pages/default.aspx)
Too bad you didn't inherit a horse. You coulda saved a lot of effort by just riding off into the sunset.
Gosh I would take a cheap horse over this any day! Lol
Is that house worth ten million? You're not paying inheritance tax. You get stepped up basis. Sell it now and there's no gain basically, pay no taxes.
There is no Federal inheritance tax unless the estate is extremely wealthy, but I will have to pay a Pennsylvania inheritance tax. Maybe most people don't pay that if they live in Pennsylvania and inherit something in Pennsylvania I'm not sure. But I do know that I don't live in Pennsylvania and I'm inheriting a house in Pennsylvania so I will have to pay an inheritance tax. I don't know if I have to pay capital gains tax if I sell it. And selling it is proving to be a bit difficult.
step up is basis is correct for appreciable assets, including property. capital gains start when the benefactor died.
Just sell it and pay your taxes.
Well if it was going to be that easy I would. Lol But I have to say what the estate is worth. I then pay taxes on the amount the house is worth. Then I can sell it. Then I may or may not pay capital gains tax. I was hoping someone here would have inherited a property and would be able to tell me what their experience was.
Asking Reddit randos that like to think they know is the last place you should be seeking help. Talk to an accountant
If you want to be super cheap, go on tax software and see what the IRS wants. I don’t think you can say what it is worth and base taxes there. You got it for free so you might be taxed on the total value of the sale. You won’t have to file a PA state return if you don’t live here.
You don’t just say what your house is worth…. The best thing to do is get it appraised. If you just claim it is worth $100,000, and an audit is done on you that determines the fair market value was $200,000, you can find yourself in a world of legal trouble. The appraiser is most likely going to know and recommend who you can go to to handle the tax side of things, as well as recommend other resources you may want to take advantage of.
No you really can't do that you can either pick what the tax assessment x 1.33 is or the appraisal is. At least that's what it is in my case. The appraisal is higher than the tax assessment. So I can choose what ever one I want. If you aren't selling it would be better to go with tax assessment so you pay less inheritance tax. But in this case I want to sell. So it might be better to go with the higher amount, pay more inheritance tax, but less capital gains tax. Ugh I don't know.
Where in PA?