We bought a house in 2001 and have had it rented out since then. We bought for $157,000 and it is now valued at $550,000.

1) If we sell our rental and put the remaining proceeds in a joint bank account with our two adult children, does the money have to go through probate if both my wife and I pass away? (Do they have immediate access to the proceeds?)


2) Are the proceeds subject to inheritance tax?

1) You will have to pay capital gains on the house, as it is considered a business property, NOT a primary residence eligible for the $500,000 tax exemption.

2) No other taxes will be due. If you give your adult children equal axxess, it would be considered a gift, and a gift tax return would have to be filed. However, you would access your Unified Credit (the credit given as part of the estate tax return) to exempt any taxes due.