Did you sell property last year that you had inherited from someone? Stocks? Bonds? A vacation cottage?
If so you deserve a share of a break that saves taxpayers billions of dollars each year.
When someone dies, the tax on the profit that has built up on investments he or she owned usually bows out, too.
Assume that stock your dad bought for $10,000 was worth $100,000 when he died and left it to you. And, let's say you sold it last year for $101,000. You owe tax only on the $1,000 of appreciation after you inherited it. The tax on the rest is wiped out by what I like to call the Angel of Death tax break.
This also works if you owned property jointly with someone -- the way husbands and wives often own investments. In that case, when one spouse dies, the tax on at least half the profit is forgiven. In community property states, in fact, all the tax can be erased.
One thing this break doesn't cover, unfortunately, is inherited retirement accounts, such as regular IRAs or 401(k)s.
But here's the important thing right now: If you sold inherited property in 2003, check the rules carefully before you file your return. Otherwise, you might pay a lot more tax than you have to.
GETTING STARTED
