No, u dont pay tax.MartinaC32 wrote: ↑ I am the sole beneficiary of an estate which includes a house. Do I have to pay tax on the value of the house when it's transferred to me?
I have no idea how this all works and I'm trying to prepare myself in all aspects for unexpected expenses.
Thanks
When the estate is passed to you, the estate will "sell" it at fair market value to you. So if it was the primary residence, then it would be exempt from taxes, otherwise there would be cap gains that the estate would be responsible for. Additional fees would be required to transfer, but would likely be minor in the grand scheme of things.MartinaC32 wrote: ↑ I am the sole beneficiary of an estate which includes a house. Do I have to pay tax on the value of the house when it's transferred to me?
I have no idea how this all works and I'm trying to prepare myself in all aspects for unexpected expenses.
Thanks
The house belonged to my mother and it was her primary residence.SubjectivelyObjective wrote: ↑ When the estate is passed to you, the estate will "sell" it at fair market value to you. So if it was the primary residence, then it would be exempt from taxes, otherwise there would be cap gains that the estate would be responsible for. Additional fees would be required to transfer, but would likely be minor in the grand scheme of things.
In addition to the above, depending on how everything is setup, and how the house is currently held, you may have to pay a probate fee on all assets. So that would be 1.5% on the value, if applicable.
Sympathies, that's always a difficult situation. But you won't have to pay capital gains tax on the value of the house at date of death if it was her primary residence. If you decide to sell it subsequently, you will have to pay capital gains tax on any increase in value from the date of death to the date of sale unless it became your primary residence. Also if it's not your primary residence, there may be an increase in property taxes starting from the date of death - check the local jurisdiction.MartinaC32 wrote: ↑ The house belonged to my mother and it was her primary residence.
She wanted to transfer it to me before she passed but her illness was sudden and fierce and we just didn't have time when she was still with us.
Thank you so much for the information. I am so overwhelmed at this whole process. I will contact her lawyer and ask for guidance.Scote64 wrote: ↑ Sympathies, that's always a difficult situation. But you won't have to pay capital gains tax on the value of the house at date of death if it was her primary residence. If you decide to sell it subsequently, you will have to pay capital gains tax on any increase in value from the date of death to the date of sale unless it became your primary residence. Also if it's not your primary residence, there may be an increase in property taxes starting from the date of death - check the local jurisdiction.
Mandatory probate fees are an annoying form of tax when someone dies and leaves significant assets. I know a lawyer who set up paperwork for a family member to automatically sell their house to their daughter on the day they died to avoid probate, with the date of death left blank to be filled in later. I've been told by other lawyers that this is questionable and would probably be disallowed if it came to light.
The tax system is incredibly complex when someone dies and leaves significant assets. Frankly it's a disgrace the way it puts that burden on the grieving family. Most online information sources give a sketchy overview and then advise you to pay a professional to sort it out.
My condolences.MartinaC32 wrote: ↑ Thank you so much for the information. I am so overwhelmed at this whole process. I will contact her lawyer and ask for guidance.
Almost certainly disallowed. The tax act considers all property to be disposed of (either to successors in law or to the estate) at the moment "right before death". If they were to give a sworn statement on the date/time the sale agreement was actually executed they'd have to lie.Scote64 wrote: ↑ ... I know a lawyer who set up paperwork for a family member to automatically sell their house to their daughter on the day they died to avoid probate, with the date of death left blank to be filled in later. I've been told by other lawyers that this is questionable and would probably be disallowed if it came to light....
