What Happens When You Inherit A House In Pennsylvania?

Recently losing a family member and inheriting a house is not always a good thing. On top of deal with the emotions that come with the loss and trying to figure out what to do with the property can quickly become stress full. In addition, you have to research Pennsylvania’s law that involve selling my inherited house Pittsburgh-PA and pay the inheritance taxes.

To learn about inheriting a Pittsburgh, Pennsylvania house, read below.

Who has rights to the inheritance?

If a family member passes away and has already created a will or living trust, most of the time their will is followed and their belongs get distributed accordingly. On the other hand, if the passed away unexpectedly the situation can become complicated quickly and you should seek the advice of a attorney to help sort out the situation. Most commonly, Pennsylvania utilizes intestate succession to pass on property that is solely in the name of the family member that passed away.

What is Pennsylvania Intestate Succession You Ask?

law of Intestate Succession in PA, and they can be found at 20 Pa.C.S.A. § 2101 et seq. These laws spell out the follow:

These laws spell out who gets what in these situations. In general, whether a person can be an heir depends on his or her relationship to the deceased. A complicated as the concept may seem, the law is laid out quite simply. If the decedent is survived by a spouse, the amount he or she will receive varies depending on which other relatives of the decedent also survive.

The Pennsylvania law regarding what portion of the decedent’s estate the surviving spouse gets can be located at 20 Pa.C.S.A. § 2102. The summary of it is as follows:

The deceased has no surviving kids and was survived by his or her spouse and had no surviving children or parents, the surviving spouse receives the decedent’s entire estate. In addition, if the deceased was survived by a wife or husband or both living parents but had no surviving children, the surviving spouse would be entitled to the first $30k of the estate, plus one-half of the remaining estate, if any is left. The decedent’s parents’ share is dependent on other factors discussed below.

Any living children Surviving. If the deceased was survived by a wife or husband and had surviving kids, all of whom were also the surviving spouse’s children, the surviving spouse will receive the first $30,k of the estate, plus one-half of the remaining estate, if any. However, if the decedent was survived by his or her spouse and had surviving children, at least one of whom was not also the surviving spouse’s child, the surviving spouse will only receive one-half of the estate. Under these circumstances, the surviving spouse would not be entitled to the first $30k. The general idea behind this is that the law presumes that the surviving wife/husband will provide care for their children, but it doesn’t make the same presumption for kids that aren’t biological to the spouse.

If the deceased has no wife or husband that are living, the rules are the follow:

1st- Kids of the deceased.

2- The deceased’s Parents

3Brother, Sister, or their Children.

5Uncles, Aunts, and their Children and Grandchildren.

6- The Commonwealth of Pennsylvania collects.

Joint Property of the deceased in Pennsylvania

If the deceased owns property jointly with someone else, and this property ownership has a "right of survivorship," then the surviving owner automatically owns the property when the other owner dies. No probate will be necessary to transfer the property, although of course it will take some paperwork to show that title to the property is held solely by the surviving owner.

In the commonwealth of Pennsylvania, these forms of joint ownership are available:

Joint tenancy. Property owned in joint tenancy automatically passes to the surviving owners when one owner dies. No probate is necessary. Joint tenancy often works well when couples (married or not) acquire real estate, vehicles, bank accounts or other valuable property together. In Pennsylvania, each owner, called a joint tenant, must own an equal share.

Tenancy by the entirety. This form of joint ownership is like joint tenancy, but it is allowed only for married couples in Pennsylvania.

Pennsylvania’s Estate & Inheritance Tax

Pennsylvania’s estate taxes are always paid for by the deceased’s estate before any property given out to any one as an inheritance. For many people that inherit a house in Pennsylvania it’s a financial burden on them if they don’t have the money to take care of it.

Pennsylvania State Inheritance & Estate Tax

In the commonwealth of Pennsylvania, you have nine months from the time of death to pay. The tax rate is 4.5% for transfers to direct descendants, 12% for transfers to siblings, and 15% for transfers to other heirs. The only exception being if they donate their house or property to a charitable organization. But any property that is owned jointly between a spouse is not subject to paying the inheritance tax. Also, while property inherited from a wife or husband, or from a under 21 child has a tax rate of 0%.

Federal Estate Tax For Pennsylvania Residents

No estate will have to pay estate tax from Pennsylvania. There is still a federal estate tax. The federal estate tax exemption is $11.18 million in 2018, which is an increase from $5.49 million in 2017. This exemption is portable. This means that with the right legal maneuvering a married couple can protect up to $22.36 million after both spouses have died.

How estate and inheritance taxes apply to a house

The information above about taxes does not only apply to cash, cars, and stuff like that. In addition, there is an inheritance tax on property If the decedent was a resident of the Commonwealth of Pennsylvania at the time of his/her death, the Inheritance Tax return is to be filed in duplicate with the Register of Wills in the county where the decedent was a resident at the time of his/her death.

How it’s Calculated for Inherited House

Typically, the capital gains taxes would be based on the difference of the sale price of the property and the total investment made in the property. (the normal cost plus the home improvements completed) The simplest way to explain capital gains tax amount would be the amount made as profit on the property. But the inherited property wasn’t purchased by the person who in inherited it, the initial cost is adjusted using the step-up basis.

Pennsylvania’s Various Tax Classifications

With Capital gains tax rates varying dependent on different circumstances, and how long you have owned the property before liquidating it. Also, short-term capital gains are applied on assets you have be the owner of for less than one year. The rate varying from 10 and 39.6% on this type of gain. On the other hand, 0% to 20% will be the rate on Long-term capital gains on anything owned more than 12 months.

In conclusion On Inheriting A Pennsylvania Home

Sometimes the easiest thing to do with a property is contact a property investor that will buy the property right away and help pay the taxes on it. In many cases they will pay all closing cost and allow you make as much money as possible. In addition, they will clean out any belongs that you or other family members may not want. A We buy houses Pittsburgh-PA type company can close on your house in as little as 7 days, or at what ever rate you desire.