Sarasota Estate and Inheritance Tax Issues: What Heirs Need to Know

You inherited money or property from a family member in Sarasota. Now you are wondering about taxes. The good news is that Florida has no state estate tax or inheritance tax. The federal rules are more complex.

Federal Estate Tax

The federal estate tax exemption is currently over $13 million per individual. Unless the decedent's estate exceeded that threshold, no federal estate tax is owed. For married couples with proper planning, the exemption doubles. Most Sarasota estates fall below the threshold, but wealthy retirees and property owners can exceed it.

Inherited Property and Step-Up Basis

When you inherit property, you receive a stepped-up basis equal to the fair market value at the date of death. If your parent bought a house in Sarasota for $100,000 in 1990 and it was worth $600,000 when they passed, your basis is $600,000. If you sell for $620,000, you only pay tax on $20,000 of gain. The $500,000 of appreciation during your parent's lifetime escapes income tax entirely.

Decedent's Unpaid Tax Debt

If the person who died owed taxes to the IRS, the IRS can pursue the estate for payment. As an heir, you are generally not personally liable for the decedent's tax debt unless you were a transferee of estate assets. But if you received a distribution from the estate before the IRS was paid, the IRS can come after you for the value of what you received.

Settling an estate with outstanding tax issues requires careful planning. Do not distribute assets until you understand the tax liabilities involved.