What are inheritance taxes?
Inheritance taxes are state taxes that heirs must pay on the value of their inheritance. Estate taxes, by contrast, are levied by the state or federal government on the estate itself and require that the estate pay. You can specify in your will that you want your estate to pay any inheritance taxes that the government may slap on your heirs. Its a nice gesture, and may even keep your heirs from being forced to sell property you leave them in order to pay taxes. What are the tax consequences of inheriting a house? When children inherit a home, the Internal Revenue Service determines their basis in the property on the date of the benefactors death. The cost basis is not the amount the owner originally paid for the house. It is the propertys fair market value on the date of the benefactors death, says Pamela MacLean, assistant public affairs officer with the IRS. “Cost basis” is a tax term for the dollar amount assigned to a property at the time it is acquired, for the purpose of determin
