Advice Wanted - Sell the Lakefront House or Keep it in the Family?

FlyingScot · 08-07-2020, 12:36 PM

Quote:

Originally Posted by thinkxingu

Our accountant told us this exact thing yesterday. We sold the parent homestead in March after my dad passed in February, so the "gain" will be calculated in that time, not from when they bought.

That being said, if someone were to have inherited property a couple years ago, there would still be a ton of gains?

Finally, the number we heard in terms of estate tax was $1M. Anything over begins to be taxed.

Sent from my SM-G950U using Winnipesaukee Forum mobile app

Joey may want to double check my answers here:

The house should be valued at time of death, so gains the past two years would be taxed. But I would guess there is a fair bit of judgement involved about when the gains occurred, so you can probably argue the lion's share occurred earlier.

Some states have inheritance taxes (I don't know which ones, but I don't think the list includes Mass), but a married couple can transfer $23MM or so to their kids, tax free from the Feds.

MAXUM · 08-07-2020, 01:00 PM

Quote:

Originally Posted by FlyingScot

Joey may want to double check my answers here:

The house should be valued at time of death, so gains the past two years would be taxed. But I would guess there is a fair bit of judgement involved about when the gains occurred, so you can probably argue the lion's share occurred earlier.

Some states have inheritance taxes (I don't know which ones, but I don't think the list includes Mass), but a married couple can transfer $23MM or so to their kids, tax free from the Feds.

From mass.gov......

If you're responsible for the estate of someone who died, you may need to file an estate tax return. If the estate is worth less than $1,000,000, you don't need to file a return or pay an estate tax. Massachusetts estate tax returns are required if the gross estate, plus adjusted taxable gifts, computed using the Internal Revenue Code in effect on December 31, 2000, exceeds $1,000,000.

tis · 08-07-2020, 01:15 PM

Quote:

Originally Posted by MAXUM

From mass.gov......

If you're responsible for the estate of someone who died, you may need to file an estate tax return. If the estate is worth less than $1,000,000, you don't need to file a return or pay an estate tax. Massachusetts estate tax returns are required if the gross estate, plus adjusted taxable gifts, computed using the Internal Revenue Code in effect on December 31, 2000, exceeds $1,000,000.

Sad that if you live in Mass. you have to pay an estate tax on property in NH. Because their is no estate tax (state) in NH if it is passed on to children. If it is passed on to others NH does have an estate tax.

MAXUM · 08-07-2020, 01:45 PM

Quote:

Originally Posted by tis

Sad that if you live in Mass. you have to pay an estate tax on property in NH. Because their is no estate tax (state) in NH if it is passed on to children. If it is passed on to others NH does have an estate tax.

I don't believe NH has an inheritance tax however I do believe that in the case of ownership change even within the same family it may be subject to the NH real-estate transfer tax unless there is some way to skirt that. Can you add an additional owner on the fly at any time and not trigger this?

Mass doesn't distinguish if assets of the "estate" are within the borders on MA or not. My guess is if you are a resident it doesn't matter. They have no problem assessing income tax on income not earned in MA so why would and inheritance be looked at any different?

tis · 08-07-2020, 06:10 PM

Quote:

Originally Posted by MAXUM

I don't believe NH has an inheritance tax however I do believe that in the case of ownership change even within the same family it may be subject to the NH real-estate transfer tax unless there is some way to skirt that. Can you add an additional owner on the fly at any time and not trigger this?

Mass doesn't distinguish if assets of the "estate" are within the borders on MA or not. My guess is if you are a resident it doesn't matter. They have no problem assessing income tax on income not earned in MA so why would and inheritance be looked at any different?

NH doesn't have an inheritance tax IF you leave it to your children. If you leave it to other relatives or friends, it is taxed. I don't believe there is a real estate transfer tax for children either.

tummyman · 08-07-2020, 09:49 PM

Please check the laws...my reading is that NH does not have an estate or inheritance tax now. But one can aways be introduced as it is up to the legislature. If you are a MA resident, they tax ALL your assets regardless of state, except they do give you a dollar credit for any estate taxes you pay to another state. So being a resident of MA would certainly bring any NH property into the estate tax calculation, including any other assets in NH or elsewhere. Makes little sense to be a MA resident.... MA is one of the few states with an estate tax now. Please note..this reply is not tax or legal advice. Seek qualified professionals to guide you.

loonguy · 08-08-2020, 06:30 AM

Anyone residing in a high tax state, but having a second residence in NH, should consider making NH their principal residence when their circumstances permit the transition. In our case, the state tax savings by transitioning our principal residence to NH after I retired more than offset the carrying costs of our NH home. We kept our other state residence as a vacation home for Winter and family visits with our kids and grandchildren who still live there. To make it work from a tax perspective, we spend more time in NH than in our other state and use healthcare and other professionals mostly located in NH, which are among the factors analyzed by the tax authorities in our other state. Of course, you should check the tax laws of your own state to determine what you need to do for a successful transition. To bring this back on topic, the potential tax savings from a transition to NH residency at some point might facilitate one or more in the next generation to take over ownership of our NH lake home, which we love and hope will be available to future generations.

BroadHopper · 08-08-2020, 07:55 AM

Property been in the family since 1892. Prime view of the Broads. Welch, Long, Sandy, Cow and Diamond Island. The Ossipees and Mt Washington. I can see sunny side of WV glistening with snow late season.

Countless memorable family vacations/reunions and weekends made it difficult to comprehend. 'On Golden Pond' style cottages are becoming non existance. Daily sight of the Mt Washington was our way of keeping time. Being on the Southern end of the lake, the huge trees kept the sun from roasting the cottage.

It was tough decision to sell. Situated on a fairly steep slope, Dad had a difficult time climbing stairs. Because of 'view tax' regulation, property tax nearly six-folded.

With 3 kids heading off to college, I couldn't afford to take over so we sold it in 1998. The money was used to buy a condo on Winnisquam, less maintenance, flat landscape, great view so my dad can enjoy his last days.

We didn't regret the move, but we miss the spot! Current owner built a Macmansion and completely ruin a beautiful campy atmosphere.

Still have the Winnisquam property and enjoying the peace and quiet the Winnipesaukee now lacks. It's all about timing, moving forward. You will miss but won't regret.

BroadHopper · 08-08-2020, 08:00 AM

Property been in the family since 1892. Prime view of the Broads. Welch, Long, Sandy, Cow and Diamond Island. The Ossipees and Mt Washington. I can see sunny side of WV glistening with snow late season.

Countless memorable family vacations/reunions and weekends made it difficult to comprehend. 'On Golden Pond' style cottages are becoming non existance. Daily sight of the Mt Washington was our way of keeping time. Being on the Southern end of the lake, the huge trees kept the sun from roasting the cottage.

It was tough decision to sell. Situated on a fairly steep slope, Dad had a difficult time climbing stairs. Because of 'view tax' regulation, property tax nearly six-folded.

With 3 kids heading off to college, I couldn't afford to take over so we sold it in 1998. The money was used to buy a condo on Winnisquam, less maintenance, flat landscape, great view so my dad can enjoy his last days.

We didn't regret the move, but we miss the spot! Current owner built a Macmansion and completely ruin a beautiful campy atmosphere.

Still have the Winnisquam property and enjoying the peace and quiet the Winnipesaukee now lacks. It's all about timing, moving forward. You will miss but won't regret.

Put the property in a trust fund. Transfer within the trust fund. When you die the trust fund 'transfers' to the trustees avoiding all tax liens.

rick35 · 08-08-2020, 08:22 AM

If you are considering a transfer find a lawyer who specializes in this. Gifting is complex and could have future ramifications. A life estate could mean financial surprises years from now if your parents go into long term care and you suddenly need to pay for it because of a parent's ownership interest.

tis · 08-08-2020, 08:28 AM

It seems the NH inheritance tax for other than children was repealed. I guess I had forgotten that.

Pineedles · 08-08-2020, 09:43 AM

Same date as Broadhopper, 1892, but luckily we still occupy our Center Harbor bay lake cottage. As we are several generations from our founder we of course have increased the number of owners. However, my parents’ generation made the excellent decision to establish a trust and lockin the number of voting shares. This has allowed us to make decisions on expenditures for upgrades and repairs without having to deal with a myriad of opinions. Memories can be too fleeting so we have documented in diaries, photo albums, and genealogical charts each generations fondest times, greatest challenges, and even our slack time sitting on the front porch watching sunsets.

Hope this helps in your decision.

08-08-2020, 07:55 AM	#8
BroadHopper Senior Member Join Date: Oct 2004 Location: Laconia NH Posts: 5,669 Thanks: 3,285 Thanked 1,132 Times in 814 Posts	Tough call Property been in the family since 1892. Prime view of the Broads. Welch, Long, Sandy, Cow and Diamond Island. The Ossipees and Mt Washington. I can see sunny side of WV glistening with snow late season. Countless memorable family vacations/reunions and weekends made it difficult to comprehend. 'On Golden Pond' style cottages are becoming non existance. Daily sight of the Mt Washington was our way of keeping time. Being on the Southern end of the lake, the huge trees kept the sun from roasting the cottage. It was tough decision to sell. Situated on a fairly steep slope, Dad had a difficult time climbing stairs. Because of 'view tax' regulation, property tax nearly six-folded. With 3 kids heading off to college, I couldn't afford to take over so we sold it in 1998. The money was used to buy a condo on Winnisquam, less maintenance, flat landscape, great view so my dad can enjoy his last days. We didn't regret the move, but we miss the spot! Current owner built a Macmansion and completely ruin a beautiful campy atmosphere. Still have the Winnisquam property and enjoying the peace and quiet the Winnipesaukee now lacks. It's all about timing, moving forward. You will miss but won't regret. __________________ Someday may never be an actual day.

08-08-2020, 08:00 AM	#9
BroadHopper Senior Member Join Date: Oct 2004 Location: Laconia NH Posts: 5,669 Thanks: 3,285 Thanked 1,132 Times in 814 Posts	Tough call Property been in the family since 1892. Prime view of the Broads. Welch, Long, Sandy, Cow and Diamond Island. The Ossipees and Mt Washington. I can see sunny side of WV glistening with snow late season. Countless memorable family vacations/reunions and weekends made it difficult to comprehend. 'On Golden Pond' style cottages are becoming non existance. Daily sight of the Mt Washington was our way of keeping time. Being on the Southern end of the lake, the huge trees kept the sun from roasting the cottage. It was tough decision to sell. Situated on a fairly steep slope, Dad had a difficult time climbing stairs. Because of 'view tax' regulation, property tax nearly six-folded. With 3 kids heading off to college, I couldn't afford to take over so we sold it in 1998. The money was used to buy a condo on Winnisquam, less maintenance, flat landscape, great view so my dad can enjoy his last days. We didn't regret the move, but we miss the spot! Current owner built a Macmansion and completely ruin a beautiful campy atmosphere. Still have the Winnisquam property and enjoying the peace and quiet the Winnipesaukee now lacks. It's all about timing, moving forward. You will miss but won't regret. Put the property in a trust fund. Transfer within the trust fund. When you die the trust fund 'transfers' to the trustees avoiding all tax liens. __________________ Someday may never be an actual day.

08-08-2020, 08:22 AM	#10
rick35 Senior Member Join Date: Mar 2008 Location: Bear Island/Merrimack Posts: 807 Thanks: 58 Thanked 203 Times in 130 Posts	Seek professional help If you are considering a transfer find a lawyer who specializes in this. Gifting is complex and could have future ramifications. A life estate could mean financial surprises years from now if your parents go into long term care and you suddenly need to pay for it because of a parent's ownership interest.

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08-07-2020, 09:49 PM	#6
tummyman Senior Member Join Date: Aug 2009 Location: Moultonborough Posts: 890 Thanks: 279 Thanked 765 Times in 272 Posts	Please check the laws...my reading is that NH does not have an estate or inheritance tax now. But one can aways be introduced as it is up to the legislature. If you are a MA resident, they tax ALL your assets regardless of state, except they do give you a dollar credit for any estate taxes you pay to another state. So being a resident of MA would certainly bring any NH property into the estate tax calculation, including any other assets in NH or elsewhere. Makes little sense to be a MA resident.... MA is one of the few states with an estate tax now. Please note..this reply is not tax or legal advice. Seek qualified professionals to guide you.

08-08-2020, 06:30 AM	#7
loonguy Senior Member Join Date: Jun 2013 Location: Moultonborough near the Loon Center Posts: 198 Thanks: 60 Thanked 69 Times in 47 Posts	Anyone residing in a high tax state, but having a second residence in NH, should consider making NH their principal residence when their circumstances permit the transition. In our case, the state tax savings by transitioning our principal residence to NH after I retired more than offset the carrying costs of our NH home. We kept our other state residence as a vacation home for Winter and family visits with our kids and grandchildren who still live there. To make it work from a tax perspective, we spend more time in NH than in our other state and use healthcare and other professionals mostly located in NH, which are among the factors analyzed by the tax authorities in our other state. Of course, you should check the tax laws of your own state to determine what you need to do for a successful transition. To bring this back on topic, the potential tax savings from a transition to NH residency at some point might facilitate one or more in the next generation to take over ownership of our NH lake home, which we love and hope will be available to future generations.

The Following User Says Thank You to loonguy For This Useful Post:
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08-08-2020, 08:28 AM	#11
tis Senior Member Join Date: Jan 2006 Posts: 6,955 Thanks: 796 Thanked 1,499 Times in 1,043 Posts	It seems the NH inheritance tax for other than children was repealed. I guess I had forgotten that.

08-08-2020, 09:43 AM	#12
Pineedles Senior Member Join Date: Aug 2004 Location: Moultonborough & CT Posts: 2,550 Thanks: 1,072 Thanked 672 Times in 369 Posts	Same date as Broadhopper, 1892, but luckily we still occupy our Center Harbor bay lake cottage. As we are several generations from our founder we of course have increased the number of owners. However, my parents’ generation made the excellent decision to establish a trust and lockin the number of voting shares. This has allowed us to make decisions on expenditures for upgrades and repairs without having to deal with a myriad of opinions. Memories can be too fleeting so we have documented in diaries, photo albums, and genealogical charts each generations fondest times, greatest challenges, and even our slack time sitting on the front porch watching sunsets. Hope this helps in your decision.