INHERITANCE TAX
In real estate, an inheritance tax is a tax, based on property value, imposed in some states on those who acquire property from a decedent.
It is a tax on the right to receive property from a deceased person.
Inheritance tax is different from an estate tax, which is a tax on the total value of a deceased person’s estate. Estate tax is paid by the estate before any assets are distributed to heirs, while inheritance tax is paid by the heirs themselves.
Not all states have an inheritance tax. As of 2022, only six states impose an inheritance tax:
Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. The tax rate and exemption amount vary by state.
Inheritance tax is based on the value of the property received by the heir, while estate tax is based on the total value of the deceased person’s estate. Inheritance tax is paid by the heirs themselves, while estate tax is paid by the estate before any assets are distributed to heirs.
In summary, an inheritance tax is a tax, based on property value, imposed in some states on those who acquire property from a decedent. It is different from an estate tax, which is a tax on the total value of a deceased person’s estate. Only six states impose an inheritance tax, and the tax rate and exemption amount vary by state.
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