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Family death stirs concern over real estate inheritance tax

How much is the estate tax exemption?

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DEAR BOB: My sister and I inherited about $300,000 plus a house we sold for $270,000 after our father passed away. According to my knowledge of the tax law, as long as an estate is below $650,000 we owe no inheritance tax. But what type of tax will be due on the $270,000 real estate portion. My sister says we will receive a Tax Form K for the next year's taxes. Is this correct? – Vincent M. DEAR VINCENT: Although you didn't give the year of your father's death, if he died in 2000 or 2001, the federal estate tax exemption was for total assets up to $675,000. If he died in 2002 or 2003, the federal exemption increased to $1 million. If he passed on in 2004, the exemption is $1.5 million. Therefore, his $570,000 estate is exempt. Purchase Bob Bruss reports online. However, if your late father was a resident in one of the few states that still have an inheritance tax on heirs, there might be a state inheritance tax. Those states are Connecticut, Indiana, Iowa, Kentucky, Louisian...