If my mother and I are on the clear deed of a house and one of us dies does the surviving owner have to pay inheritance tax on the property? Would it simply go to the survivor with no income tax due? We live in CA

If my mother and I are on the clear deed of a house and one of us dies does the surviving owner have to pay inheritance tax on the property? Would it simply go to the survivor with no income tax due? We live in CA


Correct, no taxes - you own it jointly. You own it and she owns it.

There is no tax on inheritance. However, when you sell the property, you may have to pay tax on the gain.
Read about inheritance tax: Your U.S. Tax Return: Tax on Inheritances (http://taxipay.blogspot.com/2008/02/tax-on-inheritances.html)

Also you can exclude gain of up to $250,000 on the sale of main home. Read: Your U.S. Tax Return: Profit From the Sale of Your Home (http://taxipay.blogspot.com/2008/03/profit-from-sale-of-your-home.html)

Because you JOINTLY own the house, one-half of the house is considered to be part of your and her estate.

It is likely that no estate or inheritance taxes are due because the size of the estate is too small, but one-half of the house IS considered to be part of the estate.

Because you JOINTLY own the house, one-half of the house is considered to be part of your and her estate.

It is likely that no estate or inheritance taxes are due because the size of the estate is too small, but one-half of the house IS considered to be part of the estate.



Can you give me a citation on this - I had exactly the same situation (joint owners) and the house was not considered part of the estate. It simply went to me outside the Will. I just pulled out the estate documents to make certain, and, yes, it passed to me outside the Will. It was not a small estate and was taxed and I would like to know.

If my Attorney was wrong I certainly would prefer to know now instead of later (when I get audited and Probate Court is also after me) and plan to discuss this with him. Would like to have the Section in hand when I make the appointment.

Judy:

I cannot provide you a citation, but let's look at this logically.

Just because it is NOT mentioned in the will and therefore is NOT probated does NOT mean it is NOT part of her estate.

Look at it from this point of view: Who owned the house? The legal answer is that you BOTH owned it equally, which, in the eyes of the IRS, means HALF of it was yours and HALF of it was HERS.

Because of the joint ownership with rights of survivorship, the house title passed to you as a matter of law on her death, which means there was no requirement for it to be probated in the will.

However, the IRS STILL considers half of the house to be part of the estate. If this was NOT the case, i.e. assets could be excluded from the estate through joint ownership, then every multi-millionaire in the country would be putting ALL of their assets under joint ownership with their children to avoid estate taxes.

If the estate tax return was filed by a tax professional, he/she would know this. Take a close look at the assets listed in the estate tax return.

Even IF one-half of the house is listed, you still MAY NOT BE covered, because, when your mother made you a joint owner of the house, I assume that no money exchanged hands. If so, then she effectively gave you HALF of the house as a gift. Assuming that the value of half of the house exceeds $11,000, a gift tax return was required upon that transfer.

I suggest you contact the tax professional who filed the estate return and have him/her research the issue. An amended estate return and/or a late gift tax return filed by the estate executor on behalf of your late mother may be required.

Please let us know what you find out.

Judy:

Just because it is NOT mentioned in the will and therefore is NOT probated does NOT mean it is NOT part of her estate.

Look at it from this point of view: Who owned the house? The legal answer is that you BOTH owned it equally, which, in the eyes of the IRS, means HALF of it was yours and HALF of it was HERS.

Because of the joint ownership with rights of survivorship, the house title passed to you as a matter of law on her death, which means there was no requirement for it to be probated in the will.

However, the IRS STILL considers half of the house to be part of the estate. If the estate tax return was filed by a tax professional, he/she would know that. Take a close look at the assets listed in the estate tax return.

If one-half of the house is listed, then you are covered.

If not, then contact the tax professional and have him/her reseach the issue. An amended return may be required.

Please let us know what you find out.


Right, the tax return was professionally prepared by an Attorney who is also a CPA.

He asked me to print this out and mail it to him and he will take a look.

He asked if the OP stated how the property was held and I didn't know.

I will let you know what he says.

Judy:

I made some changes after the original posting, so be sure to print out the CHANGED posting.

The issue about the gift return may be an issue.

Judy:

I made some changes after the original posting, so be sure to print out the CHANGED posting.

The issue about the gift return may be an issue.



I already printed and e-mailed -

I'll run it again.

Thanks - he said, no, it's about how the title is/was held and he needs to see the OP in order to determine what is being discussed. Then I could hear him rolling his eyes over the phone.:D