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Disposing of an unwanted inheritance
Dear Tax Talk:
I inherited a junky house that assesses
at $27,500 max. If I sell the house, can I avoid paying inheritance
tax by putting the money from the sale into a three-year certificate
of deposit? Is there any way to get around paying inheritance tax
on junk?
Marie
Dear Marie:
The house may be junky, but don't look a gift house in the
mouth!
Yes, there is a way around paying taxes on the sale,
but it has nothing to do with the condition of the property. First
of all, there is no inheritance tax paid by you. Instead, the decedent's
estate is responsible for estate taxes if the decedent's assets
exceed $1 million in 2002.
Assuming a millionaire would not have a junky home,
there was probably no need to file an estate tax return.
Regardless of whether an estate tax return is filed,
the beneficiaries of the estate receive a basis in the inherited
property equal to the value of the property at the date of death.
You estimate the property to be worth $27,500 and
if you sell it within 12 months to 18 months of inheriting the property,
you won't have any gain and consequently no tax as a result of the
sale.
You can invest the money from the sale anywhere you
want, as that does not alter the tax consequences.
-- Posted: June 26, 2002
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