Questions about an estate inheritance in Florida

Question

My father passed away last month in Florida and left his estate to me and my older sister. The estate is simple - his house (paid off 20 years ago), some household possessions, and a couple of bank accounts with balances of less than a few thousand dollars each. He had no creditors, and there will be no claims against the estate, so probate should be fairly straightforward and simple. The will is simple and specifies "share and share alike" between myself and my sister, which I interpret to mean 50/50 split (probably one reason she won't talk to me now!).

I have no intention of wanting to keep the house, and since my sister doesn't live in Florida, I assume she won't either, so it will end up being sold at some point and is worth roughly $350k.

So I have several questions, if people don't mind helping...

1. Given the small size of the estate (and the fact I will end up with just under $180k), am I going to have to pay inheritance tax?

2. I'm confused on the capital gains issue - my understanding from what I've read is that I would only pay capital gains if the house apreciates in value between the time of my father's death and the point at which it is sold. Is my understanding correct?

3. What are the chances I could obtain an inheritance advance loan, and what do those typically cost? I haven't been able to find much out there on it. The only reason I'm considering this is that my sister may not be in a hurry to sell the house, and frankly I want all of this to be over with.

Thanks alot for your help, everyone.

Answer 1

Sorry for your loss.

1. Inheritance taxes are usually called estate tax, and estate tax is paid by the executor of the will (presumably you) out of the assets of the estate before the assets are divided among the beneficiaries. Given the small value of the estate (far less than the $11 million+ Federal estate tax exemption), there is no Federal estate tax that needs to be paid out of the estate, and I expect there is no State estate tax due either, unless Florida, in view of it being a mecca for retirees, has set its estate tax exemption to zero or a minuscule amount. A comment below by Pete B. asserts that Florida has no estate tax.
2. The basis of the house is its fair market value as of the date of your father's death. If and when the house is sold, whether by the estate or by the beneficiaries after the estate has transferred title of the house to the beneficiaries, capital gains are due only on the excess (if any) of the sale price over this market value. So, your understanding is correct. Be aware the executor of the will must file a final income tax return (for 2021) on your father's behalf.
3. I have not heard of an inheritance advance loan and have no idea how they might work or cost.

Depending on what the will says, it might be possible for the estate to sell the house (paying any taxes due) and then divide the proceeds 50-50 between you and your sister, thereby avoiding the hassle of one person wanting to sell right away, and the other wanting to hold off, perhaps in the hopes of a better sale price. Or it might be necessary for the house to be transferred to you and your sister as joint owners (various costs for paperwork, title fees, etc) before it can be sold, in which case your sister would need to consent to any purchase offer that you bring before her.