What inheritance tax is owed on a home?

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Q. What is the percent of inheritance tax owed on a home in New Jersey?
— Beneficiary

A. There’s no set percentage that has to be paid on an inherited home.

Instead, the tax is based on the relation of the heir to the person who died.

Once that is determined, the tax is calculated on the amount of the distribution to that heir, said Yale Hauptman, an estate planning attorney with Hauptman and Hauptman in Livingston.

For example, he said, if the home is inherited by Class A beneficiaries – a spouse, child, grandchild, parent or grandparent – there is no inheritance tax. Charities are Class E and also not subject to the tax.

“On the other hand if the home is inherited by Class C beneficiaries – a sibling, son-in-law or daughter-in-law – there would be an inheritance tax,” he said. “The rate is a graduated one, the more inherited by that person the more tax owed.”

The tax for Class C starts at 11 percent and reaches a maximum of 16 percent, he said.

“Everyone else falls into Class D,” Hauptman said. “The tax is 15 percent on the first $700,000 received and then 16 percent on everything above that amount.”

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This story was originally published on May 8, 2019.

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