We are a Veteran Owned Business, providing 20% discounts for Veterans, First Responders, Elementary and High School teachers. We remain open during the shutdown period, so please contact us to set up a phone or Zoom meeting. Taking care of you and your family, It's What We Do!

Skip to Content
Klenk Law

How do you figure out what a house is worth for inheritance tax?

Posted on Tue Aug 11, 2015, on Probate and Estate Administration

From our “Ask a Question” Mailbag: House Appraisal for PA Inheritance Tax

Most Recently Updated July 19, 2018.

“My mother died and left us her house. We got two appraisals, which were near the value listed for real estate taxes. Then, we received a cash offer for a higher amount. Do we pay taxes on the appraisal amount, or the amount we will now sell the house for?”

How to Keep the family home in the family

House Appraisal for PA Inheritance Tax

House Appraisal for PA Inheritance Tax

You have an argument for both values, but be careful! The Pennsylvania Inheritance Tax is based on the value of the house on the date your mother died. So, you could argue that the appraised value is correct and that the house simply went up in value after her death. This would mean listing a smaller number on the Pennsylvania Inheritance Tax Return, which you would think means less tax.

Not necessarily so!

Don’t Miss Out on Reducing Taxes

If you list the smaller amount, then you miss out on two tax reducing techniques. First, if you put the sale value, you also get to deduct the costs of the sale (transfer tax, realtor commission, etc.) so the sale value may become the same as the appraised value. Second, if you use the appraised value, then the cash sale at a higher price will create a profit—capital gains—on which you will pay capital gains tax. The capital gains taxes are 18 to 20 percent federal tax and 3.07 percent Pennsylvania tax. Combined, this could be a 23.07 percent tax on the profit verses a 4.5 percent inheritance tax. Run the numbers, but you will likely find that using the cash sale value will be the more wise (tax wise) choice.

More Probate Questions?

Housing appraisals are only part of the overall probate process. By all means, if you wish to learn more, please read my more detailed article, The Probate Process All You Need to Know.

In Conclusion: House Appraisal for PA Inheritance Tax

I hope that this article was helpful in explaining how to appraise a house for inheritance taxes. Further, I included links to even more detailed information on my website. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!

Let our Probate Lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced Probate Attorneys.  By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!

Wills, Trusts, Probate, and Estate Litigation, It’s All We Do

 

Tags:

Bucks County, Inheritance, Pennsylvania, Pennsylvania Inheritance Tax rates, Probate, Probate Attorney, Probate Lawyer

What Our clients are saying

Klenk Law Logo
Stars

Peter was excellent. He explained everything very clearly and is super friendly. My wife and I originally tried using a lawyer through group legal coverage, but unfortunately the old adage - "you get what you pay for" - applied to the other lawyer, and we decided to go with a real professional.

Klenk Law Logo
Stars

Great firm. Great people. Happy to refer folks in need to estate planning to Peter and his team. They do great work.

Klenk Law Logo
Stars

I met Peter soon after he started his practice in Philadelphia, PA. He and his team have always been there for me and my various inquiries throughout my life-changing events, corporate relocations. I have lived in various cities throughout the nation, I have never had a problem in contacting Peter or a member of his team. He and his office responds quickly and returns calls to me to fulfill my requests for information or to revise my estate needs while posing relevant thought-provoking questions that I need to consider to secure my future. One of Peter's best qualities is his ability to answer clients complicated questions in a simple way to ensure comprehension.

Klenk Law Logo
Stars

I was referred to Peter after my divorce to put documents together to protect my assets. He suggested a number of documents that would help protect my children and their future. Also, he put together wills, power of attorney and living wills. I initially spoke with him on the phone, he took 30-40 minutes to understand my situation and explain the benefits of having such documents. After a week or two, I met with him in his office and signed the documents. Everything else was remote phone calls and emails. He re-explained these documents and what whom to share. I am in good hands.

Klenk Law Logo
Stars

You & your staff are the best thank you for everything.

Let us put our expertise to work for you.

Free consultation within 24 hours.