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Really? That amount?

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Maine. My mom passed away in 2016. My sister was the executor of her estate. No will.

My mom’s house, in another state, was
Sold for $250,000. I don’t know what my sister did with the contents, mostly worn out furniture. There were three other heirs.

I got my check for my share, roughly $25,000.

Does this seem low? My sister, the executor is scrupulously honest.

Do I owe taxes?

Thank you
 


FlyingRon

Senior Member
There's no inheritance tax either federally or in Maine, so it is unlikely that the $25,000 has any tax implications to you.

There is both a Maine and federal estate tax. Unless your mother's aggregate estate (and any reportable gifts) in her life was in the multimillion range, there's no tax there however (the Federal exclusion is over 11 million, the Maine exclusion about half that).

There shouldn't be any capital gains on the sale of the house as it should have stepped up in basis to the value at the date of your mother's death.
Of course if there was a regular or reverse mortgage, that would have to be paid off out of the proceeds. Further, if your mother left bills or had received Medicaid services, a significant chunk of the estate may have gone to that.

Have you asked your scrupulously honest sister?
 

LdiJ

Senior Member
Maine. My mom passed away in 2016. My sister was the executor of her estate. No will.

My mom’s house, in another state, was
Sold for $250,000. I don’t know what my sister did with the contents, mostly worn out furniture. There were three other heirs.

I got my check for my share, roughly $25,000.

Does this seem low? My sister, the executor is scrupulously honest.

Do I owe taxes?

Thank you
It does seem low for a house that sold for $250k however, if your mother had debts that her estate had to pay, or a mortgage or reverse mortgage on the house then its possible that the amount is accurate. I would guess that since you state that your sister is scrupulously honest then its probably accurate.

No, you don't owe taxes. If any taxes were due the estate paid them.
 

Taxing Matters

Overtaxed Member
Maine. My mom passed away in 2016. My sister was the executor of her estate. No will.

My mom’s house, in another state, was
Sold for $250,000. I don’t know what my sister did with the contents, mostly worn out furniture. There were three other heirs.
Household furnishings, even in relatively good shape, don't sell for a whole lot used. Who were the other heirs? If there were, say, a total of 5 siblings and the proceeds from the house accounted for pretty much all the cash in the estate, then at best you'd have gotten $250,000/5 = $50,000. And that assumes that the estate had no expenses. But it had at least the expense of funeral and burial, and may have had various bills of your mother to pay off, too. All of that comes out before the heirs get their share. You may ask your sister for an accounting of the estate to see where everything went.

Any estate or inheritance taxes would be the obligation of her estate, not your obligation unless your sister failed to pay them from the estate as she should. As pointed out already, though, it is unlikely that there are any inheritance or estate taxes on this relatively small estate anyway.

However, there may be some income tax to pay on your share of the house sale proceeds. While receiving cash from an estate is not taxable income, any capital gain the estate had when it sold the home would get passed through to the heirs if the cash was distributed to the heirs in the same tax year. You'd then report your share of that capital gain your tax return. The estate would provide you a K-1 with that information to use in preparing your return. Because the house got basis equal to the fair market value (FMV) at the time of her death, the only capital gain would be whatever appreciation occurred after her death.


There shouldn't be any capital gains on the sale of the house as it should have stepped up in basis to the value at the date of your mother's death.
You evidently did not notice that the mother died in 2016, which means there may be 3-4 years of appreciation before the house was sold, if the sale was done recently. So there well could be some significant appreciation in the home value in that time.
 

zddoodah

Active Member
Does this seem low?
Your post does not contain sufficient information to answer this question intelligently.

To clarify, you told us that the house sold for $250k, which any reasonable person would assume is the actual sale price (as opposed to the net amount received). However, you didn't say whether the property was subject to a mortgage. The mortgage balance would be deducted from the sale price, as would the cost of sale, which could be anywhere from 5-10% of the sale price. You didn't tell us about any other assets (other than the "mostly worn out furniture") or any other estate debt. If the house was subject to a $125k mortgage and there were costs of sale of 5% of $250k, that means the net amount received from the sale would be $112,500. The executor would be entitled to a fee based on the gross value of the estate, and there'd be at least the cost of the funeral and burial. Even of those things totaled $12,500 (which would be fairly low), then there'd be $100,000 to distribute to you and 3 other heirs, which means each of you would get $25k.

Obviously, the numbers could be quite different (e.g., maybe there was no mortgage), but it's not hard to imagine that $25k would be an appropriate amount. Of course, this should all be detailed in probate court filings, which should have been served on you, and you likely were entitled to request and receive an accounting from the executor.


Do I owe taxes?
Probably. However, if your intent was to ask whether the $25k inheritance you received is taxable income, the answer is that it probably isn't.
 

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