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donating a house from an estate?

My wife's mother died a couple months ago. She and her brother are inheriting equally; the estate is small. There is a house. It is old and run down, and on a street where nothing is worth very much; it will not be easy to sell. If it were donated to a charity, would there be any tax benefit to the heirs?

I suppose they could just sell it for a nominal amount and donate the receipts to a charity, but they think it might be more charitable to donate the house.

My second question isn't exactly a tax question, but it is related. She had a car that isn't worth much. My brother-in-law wants to give it to a friend that needs a car. I don't much care, but wonder if there are any problems in the estate giving away an asset.

Reply to
Troubled
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The Executor or Personal Representative needs to follow the terms of the decedent's will or the State's rules for dying intestate. Consequently, if there were no bequests to the charity or friend in the will, the assets need to be distributed to the heirs, or sold and cash distributed to the heirs.

Once the heirs receive the property, they can do with it what they want, including donating the house and car to others.

Reply to
brianwallen

As Brian points out, the estate must follow your mother-in-law's wishes as provided in her will or state law. From a practical standpoint, it doesn't matter as long as the estate isn't large enough to incur estate/inheritance taxes (about $5.1 million federal).

If the house would sell for $50,000, then your wife and her brother would each get $22K to $24K, depending on the expenses incurred to sell the house. If the house is donated to a charity, then each of the children would get a tax deduction of $25,000. (There are limitations to the deductibility based on income, but I'll assume all parties have income high enough to take the deduction in one year.)

If you are in the combined tax bracket of 35% for federal and state combined, then the gift of the house would reduce your taxes by $8,750.

Which would you prefer? $8,750 or $22,000 to $24,000?

I hope this helps. Gary

Reply to
Gary Goodman

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