Looking to save on taxes on your estate? One option you may want to consider is selling your second home after you pass away.
Real estate that you do not use as a primary residence likely is not exempt from the capital gains taxes. So, if you bought that house 20 years ago and the value has tripled in that time, you may have to pay a heavy amount — think in the realm of 35% — when you sell. That’s a lot of profit going to the government, reducing the value of your estate for your heirs.
Instead, you might want to leave the house to them and have it sold off after your death. They can then split up the money after the sale, rather than having you leave it to them directly.
If you do this, you get to make use of the tax code, which alters the value of the property to conform to the current value. The value at your death is the new worth of the property. It’s not looked at as profit anymore when the home is sold.
Either way, your heirs are going to get something out of the sale of the house. If you rush to do it in advance, though, you may wind up leaving them far less than if you wait and let the sale go through after you pass away.
If this is something you want to consider, it can really show you why it’s worth it to your family and to the value of your estate to take the time to look into all of the estate planning options you have.