Inheriting rentals
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Inheriting rentals (by Ed [CA]) Jan 9, 2019 11:25 AM
       Inheriting rentals (by David [MI]) Jan 9, 2019 11:35 AM
       Inheriting rentals (by Kim [TX]) Jan 9, 2019 11:43 AM
       Inheriting rentals (by Nicole [PA]) Jan 9, 2019 11:56 AM
       Inheriting rentals (by Richard [MI]) Jan 9, 2019 11:59 AM
       Inheriting rentals (by Landlord ofthe Flies [TX]) Jan 9, 2019 12:55 PM
       Inheriting rentals (by fred [CA]) Jan 9, 2019 4:55 PM
       Inheriting rentals (by AllyM [NJ]) Jan 9, 2019 6:47 PM
       Inheriting rentals (by Robert J [CA]) Jan 9, 2019 7:32 PM
       Inheriting rentals (by Marv [IL]) Jan 10, 2019 5:44 AM
       Inheriting rentals (by Kim [TX]) Jan 10, 2019 11:08 AM

Inheriting rentals (by Ed [CA]) Posted on: Jan 9, 2019 11:25 AM

So, when I croak and leave my rental properties to my two boys, will they have to pay inheritance tax upon receipt or when they sell the properties?


Inheriting rentals (by David [MI]) Posted on: Jan 9, 2019 11:35 AM

the exemption is $11million

Inheriting rentals (by Kim [TX]) Posted on: Jan 9, 2019 11:43 AM

If you're talking about state inheritance tax, we negotiated (if you can call it that) with the state of PA to pay the tax when the property sells. That said, interest continues to accrue...

Inheriting rentals (by Nicole [PA]) Posted on: Jan 9, 2019 11:56 AM

inheritance tax, both federal and state, is due upon settlement of your estate, not when your heirs sell.

not sure of the federal time frame but as stated above, it's now a significant amount. If you have that kind of money, you REALLY need an attorney for estate planning NOW.

In Pennsylvania, our inheritance tax is due within 9 months of the date of death ... if paid after the 9 months, penalty and interest are also due. you receive a discount if the taxes are paid within 3 months so many folks send in a check even though they don't know the exact amount of the taxes. California will have their own time frames.

Inheriting rentals (by Richard [MI]) Posted on: Jan 9, 2019 11:59 AM

I think they receive the property and the basis is stepped up to its value as of the day you pass.

Howeber, tax rules change and every state has their own special rules. Best talk to your accountant.

Inheriting rentals (by Landlord ofthe Flies [TX]) Posted on: Jan 9, 2019 12:55 PM

Also to what Nicole said, when they sell it, their purchase price is not what YOU paid for it, but the price it was appraised for when they inherited.

I don't remember the exemption being $11M, but that could be correct. I believe Trump upped it in the tax plan but I can't remember. Before that, it was between $5M and $5.5M.

Also, while appraising the estate for tax purposes after death, your heirs need to sell any houses they want to sell immediately, while still held in estate, so they can use sales price for the inheritance value instead of appraisal value. In my situation, my mother's house was overbuilt for the neighborhood and was hard to price. We sold it for far less than I would have originally appraised it, and if I paid tax on appraisal then I would have paid more taxes than I had to.

Inheriting rentals (by fred [CA]) Posted on: Jan 9, 2019 4:55 PM

Talking to a lawyer is a good advise.

Explore irrevocable trusts to your sons.

Inheriting rentals (by AllyM [NJ]) Posted on: Jan 9, 2019 6:47 PM

It can change on a dime so put them in a trust. There was no income tax here in NJ for children. One day a lawyer did a lunchtime seminar on Trusts. I went. I felt compelled to go. I got all the handouts and talked to my parents that night. They had ten properties. They decided to put them in a trust for me. Even the lawyer asked why we were doing this as there was no inheritance tax for children. They did it anyway. Some of the buildings were not put in the trust. Dad passed and mom and I ran the buildings. The year before my mother passed, a Democrat governor signed a bill requiring that children pay inheritance tax. Fortunately half the buildings were in a trust and so were not taxed. President Bush had also lowered the federal inheritance tax so I did not have to pay that. I ended up having to pay $37,000 to the state of New Jersey. that was all my working capital and I ended up cutting lawns, raking leaves and moving snow instead of investing that money. If half of the properties were not in the trust I would have had to pay federal tax and the NJ inheritance tax and probably would have had to sell a building to pay that. The buildings were appraised using comparables of sold properties that were sold as of the day of my mother's death and before. That's the way it works. I had to get a second appraiser because the first one used unsold comparables at the time which was a year after my mother's death and building prices had begun to soar due to the Pelosi Reid first time home buyers program which gave out $200 K mortgages to people with poor credit. That's the program that crashed the economy in 2008. So you never know what some crappy politicians is going to pull on you. Get a trust.

Inheriting rentals (by Robert J [CA]) Posted on: Jan 9, 2019 7:32 PM

This is why you should contact an "Estate and Probate Attorney". If you set up a Family Trust correctly, then you can leave your estate inherited tax fee to your children. --47.156.xx.xx

Inheriting rentals (by Marv [IL]) Posted on: Jan 10, 2019 5:44 AM

When you die, all your assets are valued. Currently if your assets are over 11M, you will owe tax to IRS. The threshold for state purposes varies by state.

The prior federal limit was 5m. The current law will sunset back to this amount in about 4 years.

Any tax due will be paid by the executor of your estate. He may have to sell property to pay the bill.

But 99% of people are under this 11m threshold.

Anyone inheriting your property gets a basis of FMV at date of death and pays no tax.

Do not make the mistake of giving the rentals to your children during your lifetime. This gives them your basis less any depreciation you have deducted. Its better to have a stepped up (or down) value with no depreciation to recapture.

Inheriting rentals (by Kim [TX]) Posted on: Jan 10, 2019 11:08 AM

Also, regarding Trusts, some states (like PA) don't recognize a trust for inheritance tax purposes. You need to learn about your state's rules.

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