Asked in Estate Planning, Real Estate Law and Tax Law for New York

Q: I have a real estate worth $850.000 in Long island city, NY. How much tax my kids and spouse has to pay when i pass away

2 Lawyer Answers
David Ostrove
David Ostrove
PREMIUM
Answered
  • Estate Planning Lawyer
  • Los Angeles, CA

A: Your kids pay no estate tax. Your exemption will more than cover $850,000.

Nina Whitehurst
Nina Whitehurst
PREMIUM
Answered
  • Estate Planning Lawyer
  • Crossville, TN

A: If the house was in your name alone, then it will get a step up in basis to fair market value (FMV) upon your date of death. If your heirs were to sell it thereafter for the date-of-death FMV, then the gain would be zero, so nothing to tax. If they hold it for a while and it continues to gain in value, there might be a tax (depending on other factors, such as who lived there and for how long), but at most it would only be on the gain that accrued since your date of death.

If your spouse is on title with you, then only your half interest would get a step up in basis to date-of-death value (unless you hold title as community property, which is unlikely in NY). In that case, there might or might not be a capital gains tax, but other factors would need to be considered, such as how long your spouse owned the house and resided in in prior to the date of sale. If she lived in it and owned her interest for at least two of the five years preceding the date of sale, then she can exclude $250,000 of gain under Section 121 of the Internal Revenue Code.

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