Estate Tax
Definition of "Estate tax"
Wondering what is an estate tax? While the name makes it seem like a variation to regular “property tax”, the correct estate tax definition is pretty different.
An estate tax is a federal tax imposed on the estate of a decedent according to the value of that estate upon the death of the taxpayer/homeowner via a will or according to state intestate laws. In other words: a tax the government collects from the transfer of real estate as an inheritance.
Note: estate tax does not apply to surviving spouses; only when the beneficiary is an heir. Plus, the tax is paid by the estate, not the heirs.
The first step in the computation of the federal estate tax owed is to determine the value of the decedent's gross estate. This determination can be made by adding the following values of assets owned by the decedent at the time of death:
- property owned outright.
- gratuitous lifetime transfers, but with the stipulation that the decedent retained the income or control over the income.
- gratuitous lifetime transfers subject to the recipient's surviving the decedent.
- gratuitous lifetime transfers subject to the decedent's retaining the right to revoke, amend, or alter the gift.
- annuities purchased by the decedent that is payable for the lifetime of the named survivor as well as the annuitant.
- property jointly held in such a manner that another party receives the decedent's interest in that property at the decedent's death because of that party's survivorship.
- life insurance in which the decedent retained incidents of ownership.
- life insurance that was payable to the decedent's estate.
The second step in the computation of the federal estate tax owed is to subtract allowable deductions (including bequests to charities, bequests to the surviving spouse, funeral expenses, and other administration expenses) from the gross estate. This results in the tax estate. Adjustable taxable gifts are then added to the tax estate, resulting in the computational tax base.
When buying a home, think about the future. Ask your real estate agent to recommend a tax specialist so you’re not caught off guard regarding any taxable assets.
Popular Real Estate Terms
Part of something such as the units making up a heating or air conditioning system in a building. ...
Payment made by the tenant to the landlord for the right to use property, such as an apartment or office. ...
See concrete block. ...
In short, an overage means a surplus or an excess of money. An overage can present itself at a property at an auction where the asset has gone over the asking price. Suppose there’s a ...
" A metal plate attached to the lower end of a door to prevent marring from people "kicking" the door in order to open it. A metal plate mounted on the open edge of a stairs platform." ...
Managing partner of a limited partnership who is in charge of its operations. A general partner has unlimited liability. Member of a partnership who is jointly and severally liable for ...
The abstraction method is a valuation procedure used to determine the land value relative to the total market value of the property. The abstraction approach is most often used when there ...
Performance of a complete inventory of real property within a jurisdiction. A cadastral program produces the cadastral map. ...
Depressed, poorly kept locality that may include vacant businesses. It may be a high crime area. The people living in the area are typically poor and there may also be homeless people. ...
Have a question or comment?
We're here to help.