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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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What is the best way to title real estate when being purchased

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What is the best way to title real estate when being purchased by a mother and daughter to avoid tax problems later on when one of the parties dies?

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you tonight?

Megan C :

I would like to alleviate some of your worries, because if you inherit property there is no tax.

Megan C :

So, if the mother and daughter owned the real estate, and the mother died, the daughter would inherit the share. There would be no tax. The daughters basis would be 1/2 of what she had invested in the house personally and 1/2 the fair market value on the date of the death of the mother.

Megan C :

The only time that there would be tax is if the daughter decided to sell the property for a gain.

Customer:

Is that in any state? I was afraid there would be inheritance tax which would possibly make the survivor unable to afford the tax and remain in their home.

Megan C :

No, let me check on states but typically there is no inheritance tax.

Megan C :

What states are you interested in? I see Ohio on your question information

Megan C :

Ohio does not have an inheritance tax.

Customer:

Just OH

Customer:

What about federal tax?

Megan C :

No, there is no inheritance tax in Ohio

Megan C :

No federal inheritance tax...only estate taxes, but that's only if you have a worth of over $5.2 million

Customer:

No worry about that amount of worth!

Customer:

What is the estate tax rate?

Megan C :

The estate tax rate is 35% on anything above $5.2 million

Customer:

So, it sounds like the mother and daughter in a joint survivorship deed would be okay.

Megan C :

Yes, it would be perfectly fine from a tax perspective.

Megan C :

Actually very wise, since the asset will not go through probate

Customer:

Can you think of any other considerations?

Megan C :

None that I can think of. It's typical to avoid probate and share ownership

Megan C :

Now, if the mother wanted her share to be split up between all of her children, this would not be the way to go

Customer:

She does not.

Megan C :

Or if the mother had a spouse and wanted her spouse to have that portion, then it would not either

Megan C :

Likewise on the daughter

Megan C :

if she has her own children or spouse she wants to have her assets when she dies, that would be different

Customer:

Daughter is single.

Megan C :

You should be good, then

Customer:

I guess that covers it. Thank you.

Megan C :

You're welcome.

Megan C :

If you would, please rate my response as 'excellent' so that I may receive credit for assisting you today

Customer:

okay. Can I copy this response?

Megan C :

yes, you can come back to this same web address any time and it will still be there.

Megan C :

Also, a copy will be emailed to you once you rate

Customer:

Thank you.

Megan C :

You're welcome

Megan C :

You can also print using your browser's print function

Megan C :

Please don't forget to rate, as that's the only way I receive credit for assisting tonight.

Megan C and other Tax Specialists are ready to help you
Thanks, Gloria for your positive rating. Please come back and visit me any time you have a question that needs answered. It was a pleasure working with you today.

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