There are several states within the country that levy taxes on inherited property. These taxes are sometimes colloquially referred to as death taxes. For beneficiaries inheriting property in Florida, you’ll be pleased to know the state does not have a separate income tax for inherited property. Inherited money is also untaxed at the state level because Florida doesn’t have an income tax system. For many beneficiaries, this is where they’d property stop their search for answers, but you should be aware that all property isn’t treated the same when it’s inherited.
Here are several other tax situations that could apply that you should be aware of:
Federal Taxes: While Florida does not levy an income tax on inherited property, the federal government does. However, the federal inheritance tax only applies to estates over $12,060,000 million, and it’s double for married couples. The tax is levied against the estate, so heirs will not be on the hook for these death taxes.
Retirement Accounts: If you inherit a retirement account from a loved one, you won’t have taxes levied on the transfer of the account, but taxes may be charged when you try to withdraw funds from the account. What taxes are imposed will depend on the type of retirement account. An attorney can help ensure you understand the tax ramifications associated with your inherited property.
Income Generating Property: If you inherit property that generates revenue, like a piece of rental property for instance, you could owe taxes on the income you gained from owning the transferred property. So, for example, if you inherited a multi-family building with tenants and they paid rent during the settlement or probate period, you could owe taxes on fund that were collected during the interim period.
Sold Inherited Assets: In Florida, there are no separated property taxes, but beneficiaries will owe federal taxes if the inherited property is sold after transfer. The heir should only owe taxes on the gains of the property, or if it increased in value from the point of transfer until the point of sale.
If you need to create an estate plan or need help updating an existing estate plan, please call the attorneys at Dorcey Law Firm. We can help you spell out your final wishes so those in your life know how to proceed once you’re gone. Call (239) 309-2870 or connect with our attorneys online to schedule a consultation.