Re: 1st mortgage inherited - Posted by JPiper
Posted by JPiper on April 06, 2000 at 12:15:45:
The answer is neither.
Inherited assets are inherited at their value as of the date of death. That value would be the unpaid principal balance on that date.
Your mother would only pay tax on the interest received over the life of the loan. She pays taxes annually on that as it’s received. Taxes won’t be due on the principal portion of the payment.
If your Grandmother’s estate exceeded the estate tax exemption (I beleive this is $600K-$700K) there may be estate taxes due by the estate. This would be calculated during probate…and would be due from the entire estate, not your mother.
Again, there is no tax due by your mother for receiving this mortgage…and there is no tax due for receiving principal repayments.