Senior Property Tax Break

[Ken King]

You're preaching to the choir, Ken.


Could you explain that a little? How can couples avoid that bind? I know many couples who have joint ownership on everything, so the surviving spouse is supposed to automatically keep it. Does that work?

By eliminating the practice of taxing jointly held property when it passes to a surviving spouse. I mean you buy it, pay annual taxes on it, and when you die your surviving spouse gets hit with an inheritance tax on something you have already owned jointly. Do away with this little racket and it would benefit all property owners.

Oh yeah, the only thing right now that I have heard of to prevent the inheritance tax is to form a living trust.

 

[willie]

Great! So why do they need a tax break?

They were lucky that it was waterfront property and increased so much in value. You can only borrow on a percentage of the value. 65 YOA borrows 65%, 70 YOA can borrow 70%. A lot of the elderly don't live high on the hog but their taxes still go up.

 

[willie]

By eliminating the practice of taxing jointly held property when it passes to a surviving spouse. I mean you buy it, pay annual taxes on it, and when you die your surviving spouse gets hit with an inheritance tax on something you have already owned jointly. Do away with this little racket and it would benefit all property owners.

Oh yeah, the only thing right now that I have heard of to prevent the inheritance tax is to form a living trust.

Are you sure you don't mean surviving children or other heirs?

 

[Ken King]

Are you sure you don't mean surviving children or other heirs?

No I mean the surviving spouse (though the same would happen to other heirs as well). I have seen it happen to several elderly women in my neighborhood that when their husbands passed on and the property was jointly deeded they were hit with an inheritance tax on half of the homes value. This caused them to either sell it outright or get a mortgage to pay the taxes.

 

[willie]

No I mean the surviving spouse (though the same would happen to other heirs as well). I have seen it happen to several elderly women in my neighborhood that when their husbands passed on and the property was jointly deeded they were hit with an inheritance tax on half of the homes value. This caused them to either sell it outright or get a mortgage to pay the taxes.

There are several ways a property can be jointly deeded but the most common and safest is Joint Tenants with the rights of survivorship. Maybe their ownership in the homes were complicated by a will? Under normal circumstances the death tax screws most children and other heirs. The death tax is the death blow to 70% of small business. I seem to remember that figure but it should be close.

 

[Tonio]

By eliminating the practice of taxing jointly held property when it passes to a surviving spouse. I mean you buy it, pay annual taxes on it, and when you die your surviving spouse gets hit with an inheritance tax on something you have already owned jointly. Do away with this little racket and it would benefit all property owners.

Oh yeah, the only thing right now that I have heard of to prevent the inheritance tax is to form a living trust.

You mean that survivors have to pay an inheritance tax on jointly held property? That's unbelievable.

 

[willie]

Just went over some deeds. The are "Tenants by the Entirety". No tax.

 

[Oz]

Ken - jointly held property is not taxed to the surviving spouse. If Dad dies, Mom owns the house. When Mom dies, I pay the death tax on their assets provided they are more than this year's $1.5 million limit. Below that, and I would not pay the death tax.

Seniors can obtain a reverse mortgage on their property to utilize the equity in their property.

Taxation should be fair and equal. Not based on the owners age. This is an irresponsible proposal, and I hope it dies another death this year.

 

[ylexot]

They were lucky that it was waterfront property and increased so much in value. You can only borrow on a percentage of the value. 65 YOA borrows 65%, 70 YOA can borrow 70%. A lot of the elderly don't live high on the hog but their taxes still go up.

Sorry, I didn't mean that as a question specific to your example. I'm still not seeing why the elderly need a tax break if they can get the reverse mortgage.

 

[Ken King]

Ken - jointly held property is not taxed to the surviving spouse. If Dad dies, Mom owns the house. When Mom dies, I pay the death tax on their assets provided they are more than this year's $1.5 million limit. Below that, and I would not pay the death tax.

Seniors can obtain a reverse mortgage on their property to utilize the equity in their property.

Taxation should be fair and equal. Not based on the owners age. This is an irresponsible proposal, and I hope it dies another death this year.

Well that certainly wasn't what happened according to the 3 women from my neighborhood that became widows within the past two years. I will admit as to never seeing how the property was actually deeded so that might have some bearing. All I know is that Maryland is one of the few states hanging on to this tactic and it sucks. I guess it is time to research it a bit more.

 

[Oz]

Well that certainly wasn't what happened according to the 3 women from my neighborhood that became widows within the past two years. I will admit as to never seeing how the property was actually deeded so that might have some bearing. All I know is that Maryland is one of the few states hanging on to this tactic and it sucks. I guess it is time to research it a bit more.

You can find out if you go into the SDAT system and look up their addresses. Husband and wife are as one. It's the heirs "below" them on the family tree who need to worry about death taxes. That's why attorneys and insurance companies, and financial planners are so important, and paid so well. To navigate all of the tax laws.

I suspect that your neighbors probably had another financial situation, and couldn't afford their homes after their spouse died, based on social security and investment income (or lack thereof.)