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Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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If my daughter and her husband buys a house with her mother-in-law

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If my daughter and her husband buys a house with her mother-in-law living with them
and they put her name on the title, is there an inherritance tax when she dies.

Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. Can you tell me the value of your mother in law's estate, including her ownership interest in the house.
Customer: replied 3 years ago.

Her ownership is 2/5. The vaalue of the house if about $1220,000. her part would bbe two fifth.


Customer: replied 3 years ago.

Her ownership is 2/5. The vaalue of the house if about $120,000. her part would bbe two fifth.


Thank you. Then, basically, there would be no estate or inheritance tax. Rhode Island does not have an inheritance tax. But, it does have an estate tax, but as of 2013, the exempt amount is $910,725. Since the value of her interest in the house is less than that, there would be no Rhode Island estate tax unless the rest of her estate caused her estate to exceed the exempt amount. But, this tax is on the estate, not you as the recipients of the inheritance. There is no Federal inheritance tax and the exempt amount at the Federal level is $5,250,000.

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Customer: replied 3 years ago.

The value of the house is $120,000. The state is Pa.

Thanks for the clarification. For some reason in your original narrative it stated the relevant state was Rhode Island.

Pennsylvania does have an inheritance tax, but the tax rate varies depending on the relationship of the heir to the decedent.
The rates for Pennsylvania inheritance tax are as follows:

0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger;
4.5 percent on transfers to direct descendants and lineal heirs;
12 percent on transfers to siblings; and
15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax.

So, if the inlaw is on the deed and it is inherited by a child upon death, it will be subject to an inheritance tax equal to 4.5% of the value of the interest inherited.
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