Q: My sister died and left property to my brother and sister and me. The property was sold by her attorney and the money was divided equally. Do I have to pay taxes on my portion?
A: My condolences on your loss.
In general the answer is no. Any taxes that would have been owed would be paid by the estate. Your sister is entitled to pass down $2 million in 2006 estate tax free.
Once the estate attorney or executor sells the property in an estate and distributes it, you typically do not have to pay tax on it after that.
There would be an exception if you inherited the property, and then kept it for at least 6 months before selling it. If at the time you sold, the property was worth more than the market value on the day your sibling passed away, you might pay tax on the profits. If you held the property for at least a year, you’d pay tax at the long-term capital gains rate.
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