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lilmommy11
Sep 28, 2011, 12:05 AM
Inherited a house with no mortgage but Grandma owe IRS?

Grandma Inherited a house 2 yrs ago and sold it after 1 yr ( She was told by the layer and real estate she did not have to pay taxes for selling the house due to it was inherited Layer took his cut on the full value of the house ) and moved closer to me where she bought a house Cash this tax yr she found out that she owes 80 thousand to the IRS
Now my question is we just found out My grandmother has stage 4 cancer and is not doing good if she writes a will and leaves me the house which is paid for will I have to pay the IRs what happens to the house if she didn't pay the IRS before she dies

ScottGem
Sep 28, 2011, 03:36 AM
What is the tax bill for? There is an estate tax exclusion up to 2 million. So, unless the value of the house or the estate she inherited was more than that, she should no owe any taxes on the inheritance.

When she sold the property, she was required to pay taxes on the gain over her cost basis which was the value of the property at the time the person she inherited from passed. But owing $80K sounds like a large amount. I would try to get the details of her tax bill.

But that doesn't really deal with your question. When Grandma passes, her estate will owe the IRS bill. So before you can inherit anything, the bill will be paid from the assets of the estate. If the more liquid assets don't cover the expenses of the estate, then the house may have to be sold to cover those expenses. But that also raises the question of the high tax bill. If she truly owes $80K, then the odds are there are assets to cover it.

AK lawyer
Sep 28, 2011, 07:40 AM
What is the tax bill for? ...

When she sold the property, she was required to pay taxes on the gain over her cost basis which was the value of the property at the time the person she inherited from passed. But owing $80K sounds like a large amount. I would try to get the details of her tax bill. ...

I quite agree. A $80 K appreciation in one year would be extraordinary. I would ask how the value of the house when she inherited it was determined. It could be that there was a mistake made in valuing it then.

If the lawyer received a "cut" on the sale of the house, and somehow gave her faulty tax advice, you might consider submitting a claim to the lawyer's malpractice insurance carrier.

Or it could be that the tax bill is for some other matter of which we are unaware. You need to talk to a professional until you get an answer you understand.