Inheriting valuable property in CA - Tax question
Lynne_SJO
15 years ago
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susana_2006
15 years agomariend
15 years agoRelated Discussions
1031 Inheritance Question
Comments (1)That's the way I read it. The basis of inherited property is established as the FMV (Full Market Value) of the property at the date of the decedent's death. There are exceptions for conservation easements and real property used in farming or a 'closely held business' and you'll probably need to get professional guidance there. Don't forget, the FMV at time of decedant's death is also used for calculating estate and inheritance taxes....See Morerental property questions
Comments (22)I don't know if it makes any difference, but our 1031 adventures have all been within a separate trust that was established by my late mother, of which I am trustee with power to appoint. The trust sold one property. The trust bought a second property using 1031 exchange laws. The value of the property is now more than 12 times the base cost -- a very hefty capital gain even at the current 15% rate. I know we could sell and reinvest only a portion, and pay taxes on the rest. I know I could appoint this property out of the trust to, say, our DS and DIL or our DGS (age 2). What I'm wondering is if it isn't best to let them "inherit" the trust holdings. What I don't know is if they will also inherit the tax base or if the 1031 property resets to date of inheritance....See Moreinheritance tax - how much we will pay?
Comments (28)bob_cville brings up an important point which the rest of us had overlooked. As more and more people inherit 401k's and IRAs, it is critical to understand that one needs to make the correct decision in such a case, BEFORE the funds are distributed. For our parents this was not an issue, the grandparents of Boomers didn't have these type of accounts. However, for us and succeeding generations, it is incumbent upon us to be aware not only of the current laws, but any future changes that will made in those laws by Congress. If you are inheriting any portion of an IRA, it's important that you know whether or not the owner was taking distributions. Once distributions are begun, they MUST be continued by the heirs. An IRA passed to multiple heirs may be split in any proportion the owner has specified. The heirs are best served by opening up a new IRA. Titling of this new IRA is very specific to avoid IRS problems. I've excerpted part of a WSJournal article on this issue: "...Inherited IRAs don't work like regular IRAs. If you inherit an IRA from anyone other than your husband or wife, you can't roll it into your own IRA. And you can't consolidate IRAs you inherit from different people into one account. So, if the heir had withdrawn the assets from a parent's IRA and deposited them into her own IRA, she would have undone the inherited IRA, making all its assets taxable. She also would have to remove any assets she deposited in her IRA above her allowed IRA-contribution limit for the year -- $5,000 if she's under 50, or $6,000 if she's 50 or older -- to avoid further penalties. But it appears that the account in question was left as is, except for being improperly titled. Thus, the error should be considered an administrative one that can be fixed. The reader would need to retitle the IRA so it's clear that the owner died and that she is the beneficiary. Ed Slott, an IRA consultant in Rockville Centre, N.Y., recommends using this format: John Smith IRA/ Deceased 1/1/2009/ FBO Mary Smith as beneficiary. (note: FBO means "for the benefit of") Make sure that the financial institution gets the titling right not only on the statements it sends to you, but also on the internal records it uses for reports to the IRS, he says. Some large IRA custodians use the beneficiary's name on the statements sent to him or her, but use the formal titling (as in the "John Smith" example, above) on the information it sends to the IRS to avoid confusing beneficiaries. After you have retitled the inherited IRA, you can stretch out withdrawals from the account across your lifetime, rather than being forced to withdraw the funds sooner. That gives you a chance to extend the time that tax-deferred earnings can accrue, possibly increasing your inheritance."...See MoreChallenging a Property Tax Assessment
Comments (9)Your town/city/state would be more than happy to have you pay more taxes, if that is what you want! I agree with the other posters ... your logic is a bit flawed. Depending on your town/city and how they calculate RE values (and how often), you could have assesments that are close to market value or very different. My old town in Mass kept assesments pretty current and in "normal" markets they used to lag about $100K from market value. In todays market with short sales and foreclosures the numbers can be all over the place. CA is a crazy place with Prop 13. It sets the assesment value at the purchase price, with controlled increments. So you can have neighbors with similar houses worth $1 mill, but one might be paying $2k in taxes and the other $12K. A flawed system that they also applied to commercial real estate! One of the many reasons the state of CA has major money issues. Your future buyers, if they use a bank, will be required to have an apparaisal. The assesment won't matter ... what will matter is the current RE market at the time of the sale....See Moreterezosa / terriks
15 years agodavid_cary
15 years agoTashina Knight
15 years agoLynne_SJO
15 years agoxamsx
15 years agodreamgarden
15 years agoterezosa / terriks
15 years agoterezosa / terriks
15 years agodavid_cary
15 years agogalore2112
15 years agolyfia
15 years agowestern_pa_luann
15 years agohuskyridor
15 years agoterezosa / terriks
15 years agoblueheron
15 years agoannkathryn
15 years agomary_md7
15 years agodreamgarden
15 years agosusana_2006
15 years agoneesie
15 years ago
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