My mother died in March. We had not filed yet nor have we since. She never owes, it s just paperwork. Now her home is going to closing in a week. The house selling for below assessed valued on property taxes due to condition. Who do we go to to have taxes filed for the sale of the home? I don't believe that the federal govt is owed anything since it is only 140k but I think that MD wants taxes. I know that those of us who receive a share is the proceeds have to claim it on MD income taxes but not on federal. Am I right?
When you say "her" home goes into closing I'm not completely clear on the meaning of this. She has passed, therefore the home has passed to some other status rather than being hers. It either belongs to her estate, or it belongs to a beneficiary.
If there is a beneficiary that now owns the home, they may not have to file capital gains tax on the property as there is a very generous exemption for selling homes that have been inherited.If the home is sold for less than its stepped up value, you can actually file for a reduction in your taxes which is a nice benefit.
If the home is now part of an estate it becomes much more difficult. The IRS may attach an assessment lean on the property which must be discharged before the home can be sold. Only then can the buyer of the home get a clean title. For this you will need an estate lawyer.
Angel
If you're referring to income tax, each of the heirs will have to prepare his/her own Maryland state income tax forms to determine how much he/she might owe.
Whether you owe taxes on either Federal or Maryland depends on a number of factors:
1. The income and deductions of each of the heirs;
2. The issue of stepped-up and stepped-down value on inheritance. These can be complex issues and really should be addressed either by an estate planning attorney, elder law attorney, or CPA knowledgeable on this specific issue.
3. If, combined with your individual income, the stepped down value does not raise your individual income tax liability to the level of owing taxes, then you don't owe them.
However, this isn't a simple issue and you gamble if you don't get professional help at least to determine the value of the house on date of death and the value of the house at sale. This is the critical issue - whether the value of the house is stepped up or stepped down.
Like is this an all cash / as is less than FMV sale to an investor? And perhaps an investor who approached you? I'd be very cautious on this, perhaps have your own real estate atty. do or look over the paperwork and how payment is to be done. Pay attention to what the property tax situation would be as of the date of sale too - call the tax assessors office to get the exact $ amount for the tax year to be due for buyer & seller.
Or
is it via a realtor to a regular homebuyer so they are getting a mortgage? If so, there will be a title company involved as the underwriter will require clear title to do the lending. In many states, title companies are requiring some sort of paperwork as to the fact that an over age 55 deceased property owner was not a recipient of Medicaid & so no MERP / estate recovery claim or lien on the property. If they were on Medicaid for a wide variety of programs (not just NH), a MERP lien or claim could be existing subterranean on the property. It will come up in a title search. Could kill the deal or move closing back by weeks.
Also since the owner is deceased, have you or the executor gotten the title of the property changed to reflect the death? Like "estate of" if in probate. Details matter on property transfers......