Bill Aibel's Blog
If you anticipate that you will inherit an estate at some point or if you plan to leave your estate to an heir, it is important to plan for the potential tax implications of that transfer. The federal estate tax is one aspect to consider. Depending on the value of the estate, some beneficiaries may not have to pay taxes however, those with higher value estates might end up paying a significant sum. It is crucial to plan ahead when it comes to inherited real estate.
What is the Estate Tax?
Estate Tax is assessed based on the current market value of the estate as a whole and is then paid by the estate itself. The tax is collected when assets are transferred to named beneficiaries after a person is deceased. The tax is based on the current market value of the assets being transferred after other debts have been settled or charitable contributions have been made. This tax only applies to estates worth more than $11.58 million based on the current limit established by the federal government in 2020. Estates valued over 11.58 million are subject to a 40% tax. Some states have their own estate tax requirements so there could be additional considerations based on where you live.
The first step to determine how an estate tax might be assessed is to calculate the market value of the estate. In general, this should include financial assets as well as property. For example, if someone receives $8 million in financial assets and an additional $2 million in real estate, the total value is $10 million. The value of the real estate is taken at the current fair market value, not the price at which it was originally purchased. If there is a mortgage or other outstanding debt, those are paid by the estate before the final value of the estate is calculated.
Each estate is entitled to a lifetime financial exemption, in 2020 the exemption is $11.58 million. This means that all estates up to $11.58 million will not receive a federal estate tax bill. For couples, this number is doubled up to $23.16 million. Once the asset value exceeds the established limits, every dollar is subject to the 40% estate tax which can add up quickly.
It's a good idea to work closely with a professional financial advisor when making plans for the future of your estate as there are many details to consider depending on where you live and the particulars of your situation. Ask your real estate agent for local recommendations to get you started.
10 Banks St, Somerville, MA 02144
If you're in the market for a new home, one of the first things you need to determine is how much of a monthly mortgage payment you can comfortably afford. A loan officer or mortgage broker can help you figure that out, based on your income, debts, and other information.
One thing they probably won't include in the equation is the cost of home maintenance and other essential services, like garbage collection.
Ultimately, it's up to the homeowner to build in enough "breathing room" in their budget to cover unexpected expenses. Although you can't predict exactly what those expenses will be or how much they'll cost, it's virtually guaranteed that they're going to occur. Whether you're planning to buy a new house or a mid-century dwelling, here's the short list of typical homeowner expenses that could crop up. While all these items may not apply directly to your situation, many of them eventually will.
- Plumbing repairs: Leaky pipes, clogged drains, and broken plumbing fixtures are common problems in most homes. You may also need a plumber to fix or install a garbage disposal, repair or replace a hot water heater, or hook up a new refrigerator to your water supply.
- HVAC services: When you combine the cost of semi-annual routine service calls and unexpected emergency repairs, the cost of maintaining your heating and cooling systems can really take a bite out of your household budget!
- Appliance repair: The typical family depends on at least a half a dozen major appliances to prepare meals and keep their clothes and dishes clean. When one or more of those appliances break down, chaos can ensue! In many cases, it's more cost-effective and practical to call a repair service than buy a new appliance.
- Exterminator services: Regardless of whether you live in the city or the country, unexpected and unwelcome insects, rodents, and other miscellaneous varmints can show up in your home and yard. Sometimes it's even necessary to call a wildlife control specialist to remove skunks, raccoons, and other intruders!
- Electrical repairs and upgrades: Although electrical repairs are occasionally needed for safety reasons, most calls to electricians are more routine in nature. However, when light switches, electrical outlets, and ceiling lights stop working, it can be a huge inconvenience for you and your family. In some cases, you might even be desperate enough to pay extra for emergency electrical service on weekends!
- Miscellaneous expenses: Garage door repairs, fireplace cleaning, swimming pool maintenance, deck repairs, rain gutter cleaning, professional carpet cleaning, landscaping, fence repair, home siding repair, and wet basement problems are a few of the many expenses that may require you to dip into your savings or household budget.
20 Marion St, Brookline, MA 02446
If you've recently put your home on the market -- or are considering doing so in the near future -- home staging is a priority which will soon take front and center!
Since "presentation is everything" when trying to catch the interest of prospective buyers, it's crucial to be able to see things through their eyes.
Unfortunately, being able to accomplish that objective is next to impossible because, as a homeowner, you're looking at your home and property through a completely different lens than the rest of the world. The longer you've lived in your home, the more your objectivity is compromised.
Here are a few reasons why it's really difficult to "see the forest for the trees" when it comes to home staging:
First of all, there's the emotional aspect of owning a home and seeing your life unfold there over a period of years. That's especially true for first-time homeowners, parents of growing children, and people who have sunk a lot of money, time, and energy into improvements and customization. Once you've added personal touches to your home to reflect your own tastes, personality, and lifestyle, you're viewing your home through a unique perspective that may cloud your objectivity as a home seller.
Solution: Think Like a Business Owner
For the same reason business owners and executives hire outside consultants to tell them how to improve management efficiency or profitability, home sellers often need professional marketing guidance from a real estate agent or home staging consultant. Getting input from home decorators, landscapers, or home improvement contractors may also provide you with helpful ideas, but their recommendations may not always be the most economical and cost effective.
When staging your home to enhance eye appeal and attract the most potential buyers, a good guiding principle to keep in mind is ROI or "return on investment." While you don't want to sink more money into sprucing up and staging your home than necessary, you do want to cast it in its best possible light. Depending on how recently your home has been updated or improved, your investment in home staging may be relatively inexpensive. On the other hand, if you haven't updated, repaired, or made improvements for more years than you care to remember, the cost of making your home irresistible to buyers may be a lot higher!
One More Scenario
If your tastes could be described as eclectic, "off the wall", or otherwise out of the mainstream, you might need to consider a major overall in the look and feel of your property. Unless you're lucky enough to have it be a "sellers' market" at the time you're putting your house up for sale, it's generally advisable to make your home appealing to as wide a range of potential buyers as possible. An experienced real estate professional is usually in the best position to provide the guidance you need to accomplish that key objective.