Does my husband pay tax on inherited house?

by Rob Seltzer

My husband and his brother inherited a house from their father. The brother will live in the house and is taking out a mortgage to pay my husband his half of the inheritance. Is the money my husband will receive declarable as income? If so, what percentage will the government take out?

Your question involves estate taxes. Estate taxes are always paid by the estate not the people who inherit the property. The amount of the estate exemption would be dependent upon when your father-in-law died. If the year of death was 2012, that amount would be $5,120,000 and for 2013, it was increased to $5,250,000.

So if the value of your father-in-law's estate was below either of those applicable thresholds, there would be no estate tax to pay. If we assume that this was the case in your situation, there would be no tax to pay. Since there was no sale, there would be no government withholding either.

Rob Seltzer is principal of Robert Seltzer, CPA, PFS, in Beverly Hills.

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