 Tax question (by DnB [MA]) Jun 7, 2023 4:03 PM
 Tax question (by Jim [OH]) Jun 7, 2023 5:01 PM
Tax question (by Ray-N-Pa [PA]) Jun 7, 2023 6:02 PM
Tax question (by DnB [MA]) Jun 7, 2023 6:16 PM
Tax question (by GKARL [PA]) Jun 7, 2023 8:09 PM
Tax question (by 6x6 [TN]) Jun 7, 2023 8:49 PM
Tax question (by DnB [MA]) Jun 7, 2023 8:55 PM
Tax question (by Ray-N-Pa [PA]) Jun 8, 2023 7:16 AM
Tax question (by Marv [IL]) Jun 8, 2023 8:43 AM
Tax question (by DnB [MA]) Jun 8, 2023 11:47 AM
Tax question (by Wilma [PA]) Jun 8, 2023 5:49 PM
Tax question (by DnB [MA]) Jun 8, 2023 6:04 PM
Tax question (by DnB [MA]) Posted on: Jun 7, 2023 4:03 PM
Message:
Question for the Smart folks here please.
My Dads house is in Pa.
He is 90. House is currently in his name and his 5 children are on the deed (6 people on the deed)
When he dies, will the 5 children have to pay tax on the sale of the home since they are on the deed ?
I'm thinking about a situation where the 5 kids receive the home at the stepped up basis.
It's seems like the current set up is not ideal for taxes at his death.
Any thoughts ? --173.162.xxx.xx |
Tax question (by Jim [OH]) Posted on: Jun 7, 2023 5:01 PM
Message:
Contact an estate attorney. --184.57.xxx.xx |
Tax question (by Ray-N-Pa [PA]) Posted on: Jun 7, 2023 6:02 PM
Message:
Is the deed written with the right of survivorship or is it written as Tenants in Common? This is an important matter.
Pa has an inheritance tax that the kids can look forward to. The good news is it is only 4.5% for his kids, 12% for siblings and 15% for other heirs.
Is the property in Western Pa? If so what county? I am always looking. --24.101.xxx.xxx |
Tax question (by DnB [MA]) Posted on: Jun 7, 2023 6:16 PM
Message:
Thank you for info
It is in the Eastern part of PA.
I will check on the deed.
--172.58.xxx.xxx |
Tax question (by GKARL [PA]) Posted on: Jun 7, 2023 8:09 PM
Message:
The kids get stepped basis on 1/6 of the property. Cost is the basis for what they own already. Similarly, the inheritance tax is based on the 1/6 owned by the father. That will minimize the inheritance taxes, however, they miss stepped up basis on 5/6 should they decide to sell. --209.122.xx.xxx |
Tax question (by 6x6 [TN]) Posted on: Jun 7, 2023 8:49 PM
Message:
I knew Ray and some others would know the answer. --73.190.xxx.xxx |
Tax question (by DnB [MA]) Posted on: Jun 7, 2023 8:55 PM
Message:
Is there a better option for holding the property before death ?
The will will leave the property to the children at the stepped up value
--209.6.xxx.xx |
Tax question (by Ray-N-Pa [PA]) Posted on: Jun 8, 2023 7:16 AM
Message:
Placing the property into a land trust....but Pa has really stepped up looking at this transfers - so that might trigger transfer tax.
It could free up your dad for Medicaid, but there is a 5 year look back period if he needs it soon. Your dad can't have more than $2,000 in assets, but the trust owns the real estate your dad would only be the beneficiary along with five others. --24.101.xxx.xxx |
Tax question (by Marv [IL]) Posted on: Jun 8, 2023 8:43 AM
Message:
When someone gives a house to kids, he/she also gives his/her basis. Sorry for using pronouns.
In this case, you will have to know the basis at time of gift, that is, cost plus cost of improvements over the years. This could be very low compared to selling price and there could be a large gain on sale.
A better option would have been for the dad to sell house to kids at FMV. The kids would give a note in payment and then the note could be forgiven. The dad would use his 250k/500k forgiveness of profits on residence sale to avoid most taxes. The kids now have a stepped up basis.
Or the dad could have held the house until death and again received a stepped up basis.
--67.184.xxx.xxx |
Tax question (by DnB [MA]) Posted on: Jun 8, 2023 11:47 AM
Message:
Thank you all for the feedback.
Its seems there are Two issues :
1-PA inheritance tax at 4.5% per child and
2- Loss of the stepped up basis on sale
The current Deed setup (JTROS) will provide for NO inheritance tax due being the property is jointly owned, and has been jointly owned for the year before (to prevent transfers just prior to deaths), then the co-owned portion is not subject to the tax....only the part owned by the decedent 1/6th. Having five co-owners would reduce the tax by 5/6
Of course Capital gains will be due on sale due to the loss of the step up, but depending on ones AGI that could be 0 --209.6.xxx.xx |
Tax question (by Wilma [PA]) Posted on: Jun 8, 2023 5:49 PM
Message:
If I remember correctly, GKARL is a tax accountant who lives in PA, so he knows what he's talking about. --96.245.xx.xx |
Tax question (by DnB [MA]) Posted on: Jun 8, 2023 6:04 PM
Message:
Yes Wilma.
He is spot on.
And I'm grateful for his expertise. --172.58.xxx.xxx |
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