Estate Tax in Georgia - How to Plan for Real Estate Inheritance

While Georgia does not impose an estate tax, inheriting real estate, as is the case in any state, entails a range of tax and legal considerations. The estate tax, often referred to as the “death tax,” is a federal and, in some cases, local government tax levied on the estate of a deceased individual. It is imposed prior to the beneficiaries receiving their inheritance. It’s important to note that the estate tax differs from the inheritance tax, which is applied to heirs after they have received assets from a deceased person.

Here are some issues that a Georgia taxpayer might face when inheriting real estate:

  1. Inheritance Taxes: Georgia does not have an inheritance tax, so inheriting real estate itself is not subject to state-level inheritance taxes. However, it’s essential to consider federal estate tax implications if the estate is substantial.

  1. Federal Estate Tax: The federal government imposes estate taxes on large estates. In 2024, estates valued at around $13 million for individuals or around $26 million for married couples may be subject to federal estate taxes.(These values may reduce based on future legislation.) Inheriting a substantial estate might trigger federal estate tax liability.

  1. Capital Gains Tax: If you inherit real estate and later sell it, you may be subject to capital gains tax. The tax will be calculated based on the difference between the property’s fair market value at the time of inheritance and the selling price.

  1. Property Taxes: Property taxes can change upon inheritance, especially if the property was eligible for certain exemptions or deductions. Be sure to understand the local property tax laws and how they may impact your inherited property.

  1. Property Title and Ownership: Ensuring a smooth transfer of property title and ownership is crucial. You might need to go through legal processes such as probate or filing appropriate documents to transfer the property into your name.

  1. Maintenance and Upkeep: Inherited properties may require maintenance and upkeep. You should consider the costs associated with maintaining the property, including property taxes, insurance, and repairs.

  1. Joint Ownership: If you inherit real estate with multiple heirs, issues related to co-ownership, such as decision-making and division of proceeds, can arise. It’s essential to have clear communication and a plan in place.

  1. Estate Planning: Inheriting real estate can be a part of a more extensive estate plan. Consulting with an estate planning attorney can help you navigate any complex issues and ensure that the property aligns with your overall financial goals.

It’s crucial to consult with professionals, such as tax advisors and attorneys, when inheriting real estate in Georgia to understand your specific situation and address any potential issues effectively. Keep in mind that tax laws and regulations may change, so staying informed about current tax codes is essential.