IMPORTANT INFORMATION REGARDING THE ESTATE TAX

IF YOU ARE AN INHERITOR

 

In December 2017, the President signed the Tax Reform Bill into law.

The so-called “death tax” will apply only to the super wealthy.  There has long been a movement to repeal the estate tax entirely which some argue is an unfair example of double taxation that hits family-run farms and businesses.   But full repeal couldn’t get through the Senate, so they settled on lifting the exemption from the 40 percent tax to $11.2 million from $5.6 million per individual.

 

WHAT DOES THIS MEAN TO YOU AS AN HEIR OR INHERITOR?

It is important to realize that while the decedent’s estate may not be subject to estate taxes in view of the higher deminimus level, you will most likely still need to know the value of the inherited property as of the date of inheritance in order to establish a new “basis” for tax and accounting purposes. 

When you eventually sell the inherited real estate, your accountant will need to calculate your gain (or loss) for tax purposes.   This will not be possible without knowing your basis as of the date of inheritance.

As appraisers, it is our recommendation that the appraisal(s) be obtained as close as possible to the date of inheritance.   If you wait until you eventually sell the inherited property before ordering the appraisal, the cost of such an appraisal could be substantially higher.  This is particularly true of income-producing properties as it becomes much more difficult for an appraiser to obtain data in future years.  Also, documents such as leases, rental agreements and operating expenses tend to become misplaced and even discarded over time.

If uncertain about your need for an appraisal, we strongly recommend that you ask your accountant or tax attorney for their advice in your particular situation.