I am the executor of my mother’s estate, after she died my sister was the executor but she wasn't paying the taxes so liens were placed on the property. Now that I am the executor, I was wondering if I could put the property up for sale or do i need to put the property in mine and my sisters name first? Yes, all of the liens have been paid off and the house is debt free. Also, do I need to file this property on my taxes? Our Children live in the house and don't pay rent so there is no income per say, they just keep up the property.
Estate Planning Attorney
Currently, as long as the property was your mother's, her estate owns the property, not you. As executor, you are the one with the authority to make all of the decisions with regard to the property, but you do owe a fiduciary duty to the heirs (presumably, to you and to your sister)to maximize its value. Whether you sell the property as part of the estate or first distribute the property to the heirs and let them sell it matters little -- other than having the extra expense and extra delay of recording an extra deed transferring title from your mother to the heirs.
I'm not sure what you mean by 'file this property on my taxes' -- there is no tax for acquiring a property by inheritance, though there is an estate tax in Massachusetts paid by estates whose value exceeds certain amounts, depending on the year your mother died. If you mean the federal income tax deduction for real estate taxes paid, as long as the estate owns the property, the heirs would get no deducion, but there might be a deduction available to the estate's fiduciary income tax return (IRS Form 1041) or on your mother's final lifetime return.
You really should consult a local probate lawyer guiding you through this process. The risk and the pitfalls of going it alone far outweighs the cost of consulting and hiring a lawyer, especially when dealing with the issue of taxes.
If the estate owes no debts, and you and your sister are the only heirs, then there is likely no need for the executor to sell the house. You will need your sister's cooperation to sell the house or you may have to bring a separate partition proceeding if she does not cooperate. If property is inherited, then the value as of date of death provides the basis for future capital gains or losses. You should really consult with an attorney in the state in which the property is located to maximaize your return and determine what pitfalls you might encounter with your sister and also the fact that your children are living there rent free.
Estate Planning Attorney
If there was a will, and your statement that you are the executor would indicate that there IS a will, then who is entitled to the house depends upon what the will says.
In Massachusetts, title to real property vests in the beneficiaries per the will, or the heirs-at-law if no will, at the death of the prior owner, subject, however, to the right and duty of an executor (of a will) or administrator (if no will) to take control of the property to satisfy debt and tax obligations of the estate. If a “Power of Sale” is clearly granted in a will, then property can theoretically be sold without the permission of the person or persons to whom the property was devised (given). If you decide to sell it, complicating factors would include whether a power of sale was granted in a will, whether all persons entitled to the property are willing to accept the sale, whether estate taxes are due, and how long it has been since the death of the prior owner. Typically, the executor would sign the deed, with anyone else entitled to the property, per the will, also signing.
If your question regarding taxes was about taking real estate tax deductions, I would say the following: any person or persons having a legal obligation to pay real estate taxes, can deduct the taxes on their 1040. Inasmuch as title to real property in MA vests at death in the new owner, I would say that whomever, by will or by intestacy (no will) could be said to have become the owner of the property at your mother’s death, would be entitled to take the deduction. The deduction need not be split between owners, but could be if, that was the arrangement the owners agreed upon, and the tax was actually paid by said person or persons.
This response is provided for general informational purposes only, and should not be considered to be legal or tax advice. Feel free to call at 978-256-1089 for a consultation.
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