Q: My friend wants to leave his apartment to me in his will with the lowest tax liabilities possible if I decide to sell it. What is the best way to do it? My husband and I are not planning to live in it.
A: If you inherit the property, you’ll probably be able to turn around and sell it immediately without paying any taxes. That’s because you’ll inherit this property at the then current market value on the day of your friend’s death. If you turn around and sell it, you’ll be selling it for what is considered the new cost basis for the property, and so you would not pay any federal income taxes on the sale.
If your friend’s estate is larger than the current amount he can pass down tax-free, the estate would pay any taxes owed, not you.
Published: Jun 12, 2008