immediate family members, preventing reassessment. Estate and Inheritance Taxes • Estate Taxes: These are levied on the total value of the deceased’s estate before distribution to heirs. The federal government imposes estate taxes on estates exceeding $2 million, while some states also have their own estate taxes. • Inheritance Taxes: These are assessed on the portion of the estate an individual inherits. Rates vary depending on the state and the relationship between the deceased and the inheritor. Currently, 11 states impose inheritance taxes, including Pennsylvania, Maryland, and New Jersey. Key Distinction: • Estate taxes are calculated on the total estate before distribution. • Inheritance taxes apply to the individual’s share after distribution.
Financial and Legal Consideration
Receiving a home as an inheritance can be rewarding but may also involve challenges: 1. Probate Process: If you’re not the surviving spouse, it can take weeks or months for the executor of the estate to transfer ownership to you. 2. Preparation for Sale: To maximize the home’s value, consider necessary repairs or upgrades. These costs may affect your profit margin when selling. 3. Long-Term Implications: If you hold onto the property, future appreciation could increase capital gains taxes. Consult a tax advisor for strategies to minimize tax liability. 36
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