Ohio capital gains taxes and federal capital gains taxes can cost your heirs a lot of money, stripping down the value of the inheritance you intended to leave behind.
Many people make the mistake of gifting their home or selling it to a family member before they die in an attempt to avoid estate tax on the property. Especially for people with an estate valued at less than $5 million, this is a mistake because no federal estate taxes will be due on an estate of that size. Individuals with an estate worth more than $5 million may avoid some estate tax by giving away or selling the property. However, in either case the family member who receives must pay more in federal and Ohio capital gains taxes if they sell the property, which is likely to be higher than any amount saved by avoiding Ohio estate taxes.
An Ohio estate planner can help you create a strategy for minimizing the amount of capital gains tax owed on property your heirs inherit.
When property is passed or sold to family prior to your death, they pay taxes on the difference between the price they eventually sell it for and either the price they paid you for it or the price you paid for it originally. By waiting to pass ownership of the property until you die, your heirs will only pay taxes on the difference between the price they sell it for and the fair market value of the property at the time of your death. This can mean the difference between paying taxes on a few thousand dollars, when inherited at death, and paying taxes on tens or hundreds of thousands of dollars or even millions of dollars, when transferred prior to death.
To ensure that your heirs pay as little federal and Ohio capital gains tax, estate tax, and other estate costs as possible, meet with a Dayton, OH estate planning attorney to discuss the options available and put together a complete estate plan.