01 Dec Will this inherited house be subject to the inheritance tax?

Q. A parent owns a summer house in New Jersey but lives in Pennsylvania. She dies in Pennsylvania and leaves the New Jersey house to her son, who also lives in Pennsylvania. Is there an inheritance tax on the summer house?
— Curious

A. New Jersey eliminated its estate tax on Jan. 1, 2018, but the state still has an inheritance tax.

The tax is imposed on property passing to anyone other than a spouse, parents or lineal descendants, which includes children, grandchildren and step-children but not step-grandchildren, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

These are referred to as Class “A” beneficiaries, she said.

Assets left to charities, which are referred to as Class “E” beneficiaries, also do not face the inheritance tax.

“The tax rates for additional beneficiary classifications range from 11% to 16%,” Whitenack said. “Since the New Jersey property was inherited by the deceased person’s son, who is a Class `A’ beneficiary, a New Jersey inheritance tax will not be imposed.”

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This story was originally published on Dec. 1, 2020.

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