EXIT Realty Empire Associates
Lisa Grassi Bartlett, EXIT Realty Empire AssociatesPhone: (518) 744-7795
Email: [email protected]

Real Estate and the Estate Tax

by Lisa Grassi Bartlett 08/31/2020

Image by Gerd Altmann from Pixabay

If you anticipate that you will inherit an estate at some point or if you plan to leave your estate to an heir, it is important to plan for the potential tax implications of that transfer. The federal estate tax is one aspect to consider. Depending on the value of the estate, some beneficiaries may not have to pay taxes however, those with higher value estates might end up paying a significant sum. It is crucial to plan ahead when it comes to inherited real estate.

What is the Estate Tax?

Estate Tax is assessed based on the current market value of the estate as a whole and is then paid by the estate itself. The tax is collected when assets are transferred to named beneficiaries after a person is deceased. The tax is based on the current market value of the assets being transferred after other debts have been settled or charitable contributions have been made. This tax only applies to estates worth more than $11.58 million based on the current limit established by the federal government in 2020. Estates valued over 11.58 million are subject to a 40% tax. Some states have their own estate tax requirements so there could be additional considerations based on where you live.

The first step to determine how an estate tax might be assessed is to calculate the market value of the estate. In general, this should include financial assets as well as property. For example, if someone receives $8 million in financial assets and an additional $2 million in real estate, the total value is $10 million. The value of the real estate is taken at the current fair market value, not the price at which it was originally purchased. If there is a mortgage or other outstanding debt, those are paid by the estate before the final value of the estate is calculated.

Each estate is entitled to a lifetime financial exemption, in 2020 the exemption is $11.58 million. This means that all estates up to $11.58 million will not receive a federal estate tax bill. For couples, this number is doubled up to $23.16 million. Once the asset value exceeds the established limits, every dollar is subject to the 40% estate tax which can add up quickly.

It's a good idea to work closely with a professional financial advisor when making plans for the future of your estate as there are many details to consider depending on where you live and the particulars of your situation. Ask your real estate agent for local recommendations to get you started.

About the Author
Author

Lisa Grassi Bartlett

My name is Lisa Bartlett and I reside in the Glens Falls~Lake George Area. I am a licensed Realtor® in New York. I provide strategic marketing and transaction services to my clients in the upstate New York area. I bring 20 years of experience in the construction and investment property industry to the table. This experience has provided me with a vast portfolio of reliable professionals in the industry who will help make completing the sale or purchase of your home be seamless. I have lived in the Greater Glens Falls area since 1985 and have developed a large network through involvement in many professional networking groups and through getting involved and serving in my community. I have earned respect and trust through hard work and good ethics. When you list or buy with me, my large network will prove to be a great asset for you. I will listen to your needs and wants and help you achieve them. I offer tireless energy and enthusiasm and fully believe when you expect good things to happen they do! Let me help you make good things happen!

Our Roots: EXIT Realty Corp. International, a full service real estate franchisor, opened for business in Toronto, Canada on September 3, 1996 and in record time, expanded across North America. Our unique business model, the EXIT Formula is one of the key reasons for our phenomenal growth. 

The EXIT Formula is Real Estate Re-Invented™. For the first time ever, the concept of single-level residuals taken from both the insurance and music industries has been introduced to real estate. Residuals are revolutionizing our industry by fostering a mentorship culture of teaching, training and coaching and creating prosperity and the potential for unlimited financial returns.

EXIT Realty Corp. International earned a Distinguished Honoree medal in the category of “Most Innovative Company in North America” by the International Business Awards, the only global, all-encompassing awards program honoring great performances in business.

Videos by EXIT:

https://www.youtube.com/watch?v=m0u4QHcBerc&feature=youtu.be

https://www.youtube.com/watch?v=9D3RHb3Fsjs&feature=youtu.be