Can the daughter deduct property taxes on the house she inherited from her mother without a will?
She died two years ago. She wanted me to stay home as long as I wanted because I was the only person taking responsibility for her care.
I have several brothers and sisters. All have their own house and have no desire to remove me from it. The property is debt free. If I decide to leave the house, then the proceeds of the sale would be shared between all of us, but until then it has been agreed that I can stay, as long as I continue to pay the taxes and normal expenses of living there. -low.
My mother may have had a will, but we haven’t found it yet. She was a hoarder, and no one really knows where she might have hidden it. Can I deduct property taxes on my federal income taxes even if the tax bill is in their name?
A: You ask an interesting question. On the one hand, you’ve treated your mother’s house as your own for most of your life. Yet the house belonged to your mother. Generally, for income tax purposes, the person who owns the home is entitled to deduct property taxes. In your case, it would appear that while your mother was alive, you could not deduct these taxes.
Here’s the interesting part: It doesn’t matter who receives the tax bills for the house or if the tax bills are in someone’s name or another. When it comes to filing a federal tax return, the person who owns the house can deduct the property taxes that were paid for the house.
After your mother died, and in the absence of a valid will stating different wishes, it would appear that you and your siblings inherited the house and can now own it equally. It would make sense if you could deduct your payments to local authorities for property taxes on your federal tax return.
But, before taking this deduction, you will need to determine whether you should take it. Depending on how much you earn, the standard federal personal income tax deduction for 2021 is $12,550, according to the Internal Revenue Service website.
Before you can qualify for the deduction of your property tax payments, you must determine if you have deductions for state, local, and property taxes that would exceed $10,000 and any other deductions that would cause you to exceed the $12,550 threshold. $. (You are limited to a grand total of $10,000 in deductions for state, local, and property taxes in any case.)
You will need to see if your deductible expenses are high enough to meet these thresholds. If this is the case, you will be able to deduct your property tax payments. Otherwise, you will benefit from the standard deduction. If your filings are more complicated, you will need to speak to a tax professional about your situation and how the property tax payments you make affect this.
You need to have a conversation with your siblings about the property and get a written agreement in place that outlines your understanding of the property: who owns it, how you get continued use of the property if you pay taxes property, utilities and insurance, and which covers necessary ongoing maintenance (major and minor repairs).
And things will happen. Let’s say the roof needs to be replaced. You should have an agreement on sharing major expenses, assuming everyone owns the property collectively. If you are going to face this money, then you will want to have something in writing that says you will be reimbursed for these expenses from the proceeds of the sale before the net profit is split evenly. Likewise, if you owe money for expenses that should have been shared, but one or both of your siblings paid for the expense, they will also recover their personal expenses.
It is difficult for siblings or heirs to draft this type of agreement without the help of a professional. Consider talking to a lawyer to help you document your agreement with your siblings. If you can’t get your siblings on board for a little legal help, write them a letter (everyone can sign) because memory can be short and receipts fade.
Finally, if one of your siblings dies, you don’t want to get into a fight with that sibling’s executor or estate representative. Which could easily happen if there is nothing written that has everyone’s signature.
Ilyce Glink is the author of “100 questions every first-time home buyer should ask(Fourth Edition). She is also the Managing Director of Best Money Moves, an app employers provide to employees to measure and reduce financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them via the website, BestMoneyMoves.com.