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Question about inheriting property
Old 07-01-2011, 10:16 PM   #1
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Question about inheriting property

My SO's aunt just passed away and he inherited her house. My SO is still w*rking and resides in CA, but the house he inherited is in another state.

What are the tax implications?

Thanks in advance.
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Old 07-01-2011, 10:53 PM   #2
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You should consult an attorney, but as I understand the rules any tax implication is the duty of the estate to settle. The actual property comes to the inheritor tax free. At which point your SO will have whatever tax obligations are part of owning property (such as property tax) or of sale of property, such as capital gains tax, if there are any.
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Old 07-01-2011, 11:25 PM   #3
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I'm no expert either, but in addition...I'm fairly certain that any capital gain or loss on the property when sold would be based on the valuation of the property when sold minus the valuation of the property as of the date of his aunt's death. There used to be an option under estate tax law to use an alternate valuation date of six months after death, but I think that option has to be applied consistently across the entire estate. (So if his aunt owned stocks that she willed to his sister or something like that, then the stocks and house would both have to be valued as of the date of death or as of six months afterwards.)

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Old 07-01-2011, 11:46 PM   #4
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I inherited a house a year ago. I had an assessor evaluate the property and give a fair market value of the property for a basis for tax purposes. The basis is set at the value at the time of death. This way, I only will owe capital gains taxes on the profit since that point. In the current market, it looks more like I will be harvesting a tax loss rather than a profit but that will help, too.
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Old 07-02-2011, 08:54 AM   #5
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One of the problems with inheriting property is that you must maintain it until sold.

There was an owner in our building who reportedly inherited a nice chunk of property just as the market collapsed. She had it for sale but got no offers. After a couple years she needed to sell her apartment because she couldn't maintain both.

Inheriting property is a gift horse whose mouth requires careful inspection.
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Old 07-02-2011, 11:11 PM   #6
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My mother died recently in Florida and my sister lives in CA and will be inheriting a sum from my mother's estate. All of the estate work is being done by a attorney in Florida.

You will just need to contact an attorney in the "other state" to determine how to deal with selling or re titling the home.
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Old 07-03-2011, 12:17 AM   #7
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Sorry about not mentioning it earlier; he is not selling. He is keeping the house. The house is next door to his parents' house.
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Old 07-03-2011, 07:53 AM   #8
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Quote:
Originally Posted by tmm99 View Post
Sorry about not mentioning it earlier; he is not selling. He is keeping the house. The house is next door to his parents' house.
Any other info to add?

You should probably look at the tax residency requirements of the state where the inherited property is located to make sure they do not use home ownership as a qualifier for residency. You should also look at the state estate tax definitions to make sure the second home does not make the entire estate subject to state estate tax.

You need homeowners insurance on the house, and if you have umbrella liability insurance you need to update that policy as well.

Other than that, there are cost and maintenance aspects to remote home ownership but no real financial issues.
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Old 07-04-2011, 12:31 PM   #9
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Everyone, thank you for the posts! I think SO will be OK with little consequences, but we will consult an attorney as suggested.
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