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hnl66
Returning Member

INHERITANCE TAXES IN CALIFORNIA

How is it best navigated for the inheritance tax in California when a home is involved?  Also, is there any way to minimize the taxes on homes sold beyond the standard exemption?

6 Replies
Bsch4477
Level 15

INHERITANCE TAXES IN CALIFORNIA

There is no estate or inheritance tax for California assuming that the home is sold soon after it was inherited so that the value at the time of the decedent’s death is the same as the value of the sale. 

hnl66
Returning Member

INHERITANCE TAXES IN CALIFORNIA

Thanks Bsch4477 and any other options for selling the home and minimizing the tax implications beyond the standard $250K per owner?

Bsch4477
Level 15

INHERITANCE TAXES IN CALIFORNIA

The $250 K exemption only applies for the primary home owner not to a beneficiary. Did you inherit the home and then lived in it as your primary home?  If you inherited the home and then sold it promptly there is no tax liability. 

hnl66
Returning Member

INHERITANCE TAXES IN CALIFORNIA

Bsch4477,

There have been no activities with this property and just looking for the best way to get the beneficiaries the best value.  It seems that the best minimal tax navigation is thru the inheritance benefit.  If you have any other information that would help with this decision it is most appreciated.

NCperson
Level 15

INHERITANCE TAXES IN CALIFORNIA

@hnl66 - the "inheritance beneift" - let's be sure we are all talking about the same thing.  The cost basis of the property 'steps up' through the estate to be equal to the market value on the date of death, so if the estate sold it for that "date of death" price, there is no capital gain so no tax. (I am keeping this simple as there are selling costs involved as well.) 

 

if the estate sells the property for more than the value on the date of death, the gain is automatically "long term" even though it may have been less than a year from the date of death. 

 

does that help?  

hnl66
Returning Member

INHERITANCE TAXES IN CALIFORNIA

NCperson,

Yes, thank you for the clarification on inheritance tax.  If you have any other items of interest on how to save on paying taxes if the property is sold other than the exemption, that would be appreciated.

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