I sold my mothers house who passed away this year. In the will, it is to be split 4 ways with my other brother and sisters. Will we owe federal taxes and Michigan state taxes?

ANSWER

The BIDaWIZ Team's Answer:

Property that you directly inherit is unlikely to be taxable since the federal estate tax exemption is $5.12 million for 2012. However, since the property was sold, it may be subject to capital gains taxes. But, the cost basis of the property is the fair market value of the home at the time of your mother's death because of the step up provision which effectively will significantly reduce any capital gains taxes you may owe. You need to find out the amount that the property was sold for and if an estate tax return was filed which will provide the appraised value at the time for death. There is no estate or inheritance tax specific to Michigan.