Posted on 06/17/2021 2:42:35 PM PDT by packagingguy
Biden wishes to double tax inheritances. This will spell the end of small family fortunes.
(Excerpt) Read more at dailymail.co.uk ...
When Democrats say “pay your fair share” they mean 100%. They want ALL the money.
If you have an inclination, I'd really appreciate an outline of just how that works in your family situation.
The Estate tax is Theft. Period.
Democrat politicians have sold property to their buddies for $1.. Why can’t any one else?
That’s what really galls me. The government “manages” inflation to maybe 3% per year. The purchasing power of money goes down 3.3 times at 3% inflation over 40 years. Then the bastards tax you on your nominal gain, not your real gain.
Fortunately, our real estate value is up a lot more than 3.3X over the 40 years we’ve owned it, but we were dumb-luck fortunate to have bought in Silicon Valley. Others are nowhere near as lucky.
Just like estate taxes never affected the Kennedy’s.. They always hid their money overseas.
Expect an increase of transfers of houses, bank accounts, etc to the next generation.
As usual, you are right on the mark AC. I’ve been in the process of doing similar things for my children over the last couple of years. I am going to look dirt poor in a year or so.
Is there any threshold to this proposed estate tax?
Example, someone owns a house worth a million dollars TOD’d to an heir**, and has accounts (401k, IRA, brokerage, checking, savings) totalling almost a million TOD’d to that heir and another heir.
How badly will the heirs get hit when the owner passes on?
(** In California this is possible.)
No capital gains tax on sale of primary residence?
Then what is the 500,000 exemption for couples and 250,000 exemption for singles for?
The inter vivos transfer of an apreciated asset causes the grantors original cost basis to “carry over” to the grantee. The assignment of a nominal price is not binding on the IRS.
I would absolutely advise anyone to consult with a professional before doing anything stupid based on what I post here!
Here's something else worth considering ...
1. Suppose you have two parents living in a home worth about $500,000 that has no mortgage on it.
2. Instead of worrying about "death tax" issues when they pass away, have them sell the house to you while they are still alive (as I suggested before).
3. But instead of selling it for $25,000 and facing the prospect of an IRS audit where you might face a tax problem, have them sell it to you for the full $500,000.
4. Sign them to a lease agreement where they pay you a reasonable -- but above-market -- rent to live there. Let's say that home would fetch $2,500/month on the open market. Charge them $4,000/month. If you're ever scrutinized for it, just make sure the lease includes some kind of concessions that you'd never give to an unknown renter but could easily justify the higher rent -- like the rent has no escalation for five years, you agree to do their grocery shopping for them, you'll change the oil in their cars every few months, and you will invite them to Thanksgiving dinner every year (LOL).
5. So now you basically get them to pay down the $500,000 at the rate of $4,000/month for as long as they live. If they live there for ten years, you've got $480,000 in rental revenue out of it, minus your expenses. And you have the equity in the house, too.
6. Here's where it gets interesting ... Since you are owning the property as a rental, you can probably deduct the full cost of ownership without being subject to the annual cap on state and local taxes. You can also deduct costs of ownership that you wouldn't be able to deduct for your primary residence -- like depreciation, maintenance, etc.
7. When you eventually DO sell the house, you will pay a capital gains tax based on a cost basis of $500,000 (adjusted for depreciation) ... which you would have had to set as the step-up cost basis anyway under the stupid Biden proposal if they left the home for you directly as an inheritance.
Yep. I was going to say the same thing. What about having the children placed on the deed to the home prior to the death of parents?
Rose Kennedy died in Massachusetts, where she lived for the last twelve years of her life.
The Kennedy’s managed to have Rose’s estate settled in Florida, where she hadn’t lived for twelve years. Florida has no estate taxes.
How convenient.
High Inheritance tax is one of the points spelled in Communist manifesto as an Action to be done ASAP.
My parent put three homes and their IRAs and other investments into a revocable trust. We put out home and investments in a revocable trust for our kids, too. It’s our property. We are solidly middle class.
Damn, ain’t that the truth.
Yep it is!
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