QUESTION
How could I limit tax liabilities when inheriting property?
Asked on Aug 06th, 2015 on Estate Planning - Nevada
More details to this question:
Are their less tax implications upon my mother’s death if my mother’s rental property is owned jointly by me before her death?
9 ANSWERS
If the value of the properties is not great, you won't need to pay federal estate tax. Whether or not you'll need to pay state estate taxes will depend upon which state the properties are located in. However, if you and your mother are "joint tenants" of the properties, they would automatically come to you upon her death. You might also look into setting up an LLC or a corporation for the properties to reduce or limit tax liabilities.
Answered on Aug 07th, 2015 at 10:16 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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The tax affect of inheriting an interest in property is that your tax basis of the property is the fair market value on the date of death. That will increase your depreciation and/or reduce any gain on sale. There aren't any negative tax aspects of inheriting property.
Answered on Aug 07th, 2015 at 4:45 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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Clearly your mother is in need of some estate planning, with or without your help. Properly done, actions can be taken to minimize inheritance taxes. One of those potential means might be to transfer some of the property to joint ownership. It is also possible that could make matters worse. Seek counsel with the details.
Answered on Aug 06th, 2015 at 8:05 PM
No, and there can be more. If you own the property jointly, there may be an issue of whether the property gets a full step up in basis at her death. On the other hand, there is no gift tax in Oregon, so, if her estate is more than $1 million, the lifetime gift to you could reduce the amount of taxes owed at her death for estate tax. You need to compare the amount of tax owed on the capital gain in the property versus the Oregon estate tax saved. Usually the value of the basis step up is much more valuable. So, it makes sense for most people to keep ownership of all of the property in her estate.
Answered on Aug 06th, 2015 at 3:32 PM
You have it backwards; if you are given the property (ideally via a trust) then you get the property with the basis stepped up to FMV on the date of death.
Answered on Aug 06th, 2015 at 2:47 PM
Commercial Attorney serving Chicago, IL
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Ashcraft & Ashcraft, Ltd.
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The estate tax implications are not affected by transferring the property to as the surviving joint tenant or in a distribution under a Will. The asset is part of your mother's estate. The capital gain you experience could be affected. The property will have a basis equal to its value at the time of death if you receive it as a distribution under a Will. The basis will be unchanged if you receive it as the surviving joint tenant. The difference in the basis could affect the capital gain tax due upon sale.
Answered on Aug 06th, 2015 at 2:16 PM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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No, and maybe, but first, this is a complex question that should properly be answered in a general review of your mother's whole estate plan. Other than real property taxes, taxes aren't assessed on individual parcels, they are assessed on the whole of the estate. If your mother gives you an interest in property prior to her death, this creates the need to file a gift tax return. No gift tax would be due, but the gift would reduce the amount of property that your mother could transfer at her death free of federal estate tax so no net benefit for federal estate tax. Such a strategy may reduce Oregon estate tax, but there are many other very real effects of such a transaction. Again, your mother's estate plan should be reviewed by a knowledgeable estate planning lawyer to get the best results.
Answered on Aug 06th, 2015 at 2:13 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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Consult with your accountant.
Answered on Aug 06th, 2015 at 1:33 PM
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It is probably too late. Since you took title as a joint tenant her estate will lose the step up in basis for your not her. Address the issue with your accountant to see if it would pay to try to unwind the transfer. This is opinion is solely based upon the facts presented in the inquiry. Additional facts may be important and may change the analysis. If you are uncertain, seek legal counsel. We are not your attorneys. This answer is being offered to assist you in determining if you need to retain legal counsel to assist you, not to resolve your issue through an email inquiry.
Answered on Aug 06th, 2015 at 1:32 PM