Business // Ronald Lipman

Timing plays role in tax on sale of inherited property

Q: I inherited my late father’s house, which was appraised by the Harris County Appraisal District for $325,000, and sold it seven months later for $410,000. Will I have to pay capital gains tax?

A: The appraised value of a home for property tax purposes does not always match the actual fair market value. In fact, it is common for a home to be worth more than the appraised value.

You should consider hiring a professional appraiser to value the home as of your father’s date of death. Because you were able to sell it for $410,000 only a few months after he died, it is likely the appraiser will conclude that the fair market of the home was either equal to or very near that dollar amount.

If the actual fair market value as of your father’s date of death was equal to or greater than $410,000, then you will not owe any capital gains taxes.

The cost to hire an appraiser is nominal in comparison to the tax you may save.

Q: I recently learned that my father had a bank account in North Carolina where he lived before his death. There is less than $1,000 in the account. He did not have a will. I was told I have to set up an estate in order to get the money. They want $120 to set this up. Do I have to set up an estate to get this money?

A: According to the state treasurer’s website in North Carolina, they do want you to provide letters testamentary issued by the court when claiming money from an estate.

If you have found a way to probate his estate and obtain letters testamentary for only $120, then you should proceed with that plan. Normally, it costs significantly more than $120, so it is possible you have been told something misleading.

You should call the treasurer’s office in North Carolina to see if there is any way to claim the funds without probating your father’s estate. Many states have streamlined procedures in place when the amount being claimed is relatively small in value.

Q: I am the sole beneficiary of my husband’s IRA. I want to give a portion of it to my children if my husband should die before me. Is there a way to give them part of his IRA and have them be responsible for the income taxes on the portion they receive?

A: Yes, all your husband needs to do is change the beneficiary designation so that it will be paid to you and the children in various stated percentages.

Each beneficiary will be responsible for the payment of the income taxes on the portion received.

The information in this column is intended to provide a general understanding of the law, not legal advice. Readers with legal problems, including those whose questions are addressed here, should consult attorneys for advice on their particular circumstances. Ronald Lipman of the Houston law firm Lipman & Associates is board-certified in estate planning and probate law by the Texas Board of Legal Specialization. Email questions to