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LegalGems
LegalGems, Attorney
Category: Estate Law
Satisfied Customers: 7629
Experience:  Private Practice; Elder Law Attorney; Estate Planning; Attorney Mentor
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I received money from sale of a house from my deceased

Customer Question

I received money from sale of a house from my deceased parents. How Can I avoid taxes and can I gift my son a portion of this?
Submitted: 2 months ago.
Category: Estate Law
Expert:  LegalGems replied 2 months ago.

Hello! I will be reviewing your question and posting a response momentarily; if you have any follow up questions please respond here. Thanks!

Expert:  LegalGems replied 2 months ago.

My sympathies for your family's loss; what state is this in please?

Customer: replied 2 months ago.
New York. Also do I have to claim this money on my 2016 taxes as I received it this month
Expert:  LegalGems replied 2 months ago.

Thank you for your patience.
So when a person inherits a property, the heir receives a stepped up tax basis for federal purposes. What this means is that any appreciation during the original owner's lifetime is essentially wiped clean, and the heir is only responsible for taxes on appreciation between the date of death, and the date of sale. This is a very useful tax tool.

This is the IRS's explanation:

https://www.irs.gov/help-resources/tools-faqs/faqs-for-individuals/frequently-asked-tax-questions-answers/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances

An individual, including an heir, may gift up to $14,000 per year without having to file any tax documents. Please see:
https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax

They may also gift amounts up to $5,134,000 over a lifetime, without incurring a gift tax, but for amounts over $14,000 the gift form must be completed. please see:
https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax

It is also possible to "disclaim" an inheritance-this is a manner in which an heir can allow property to pass through, to go to the next on the list, so to speak. This is most common when a wealthy parent wishes the property to pass directly to their children, so that the property never enters the parent's estate. All or a portion of an inheritance may be disclaimed.
Please see:
https://www.law.cornell.edu/cfr/text/26/25.2518-2

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I hope the information I provided is useful. If you need further clarification please post here and I will reply as soon as I see it; otherwise, Kindly

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No attorney client relationship is created as this is general legal information, not advice; and a personal attorney should be hired if one wishes specific legal advice for their personal situation.

Customer: replied 2 months ago.
You did not answer if I need to file this money in my taxes this year as I received the check this month
Expert:  LegalGems replied 2 months ago.
If there is no tax due (i.e. no post death appreciation) then no need to file a return. Please let me know if that clarifies!
Customer: replied 2 months ago.
Not really, I want to know if myself, not the deceased has to file this money on my 2016 taxes as income??
Expert:  LegalGems replied 2 months ago.

If there is no appreciation, then there is no need to file a tax return as the stepped up appreciation would be non taxable. Does that help?

Expert:  LegalGems replied 2 months ago.

All the information provided is about the heir, not the deceased. The heir is the relevant person -the person inheriting. Hope that helps! please follow up if it does not. thank you.

Expert:  LegalGems replied 1 month ago.

Hello again; just checking in to see how things worked out;
if you have further questions please don't hesitate to reach out to me here on Just Answer.
Thanks!

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