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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Sidnificant other of 10 years died Nov 2009 in Texas. He had

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Sidnificant other of 10 years died Nov 2009 in Texas. He had a will naming me executor/and giving me his full estate. Total of the estate was less then $200,000. Probate of Will ended March 2010. I received the estate.

At about that time his life insurance of just under $200,000 was sent to me. I understand the life insurance isn't taxable (I hope that is true!)

But what about the full estate (house/truck/furniture etc)?
I used some of the life insurance to pay off the truck(no equity owed what it was worth) and any bills he had. Had his taxes done: and paid the tax bill for his 2009 IRS return.
Selling the house to his family (family land) at tax roll amount($67,500)...I haven't changed it to my name so it will go from the "estate" to dad/brother. What tax liability will that cause?
Thank you for your time

Hello JA Customer,

 

Since this person's estate was less than $3.5 million in the 2009 tax year when he passed away, none of the assets in his estate would be subject to estate taxes. The only assets that may be subject to tax would be if he had any money in an IRA account or similar tax deferred retirement account. If that is the case, you would owe regular income taxes on the amounts in those accounts when the money was withdrawn. If he had no such tax deferred accounts, then you would not actually owe any taxes on the value of the assets inherited.

 

If you now plan to sell the home which you inherited, you would only owe taxes if you have a gain from the sale. When you inherited this home in Nov of 2009, you would have been entitled to a stepped up basis in the home. What that means is that your new basis became whatever the fair market value was of the home on the day he passed away. If you now sell the home for more than that basis, you would owe capital gains tax only on the gain. However if you are selling the home for the tax assessed value, then it sounds as though you are selling it for the same amount as what it was worth in November of 2009, in which case you would have no gain and no tax liability. It does not matter that the home is passing directly from the estate to his relatives.

 

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Thank you JA Customer

 

 

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