Need need not worry about estate or inheritance at the Federal level because you are under the exemption amount on the Federal level so no estate taxes or estate tax return is required at the Federal level. But, there will be a tax on the New Jersey level. Because you are inheriting from your sister, you and your sisters are considered Class C beneficiaries. As such, although the first $25,000 of property inherited by someone in Class C is not taxed. On amounts the next $1,075,000 in excess of the first $25,000, the tax rate is 11%. If you then sell the house, there will be no tax on the sale because the basis of the property gets adjusted to its fair market value at the time of your sister's death and thus if you sell it at that price, there is no gain, and thus no tax.
This is the part of my job I don't like...when the law is not in favor of my customer. I wish I could tell you there would be no tax impact, but, I can only provide you information based on the law so that you can act on the best available information to you. ………..I wish I had better news, but can only hope you recognize and understand my predicament and don't shoot the messenger. I'm sorry!
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