Inheritance Taxes in Pennsylvania
Contents
Generally
Per the Pennsylvania Department of Revenue:
"Inheritance tax payments are due upon the death of the decedent and become delinquent nine months after the individual's death. If inheritance tax is paid within three months of the decedent's death, a 5 percent discount is allowed."
Inheritance Tax rates from the Pennsylvania Department of Revenue
Inheritance Tax may be due even when property does not pass through operation of probate[1], such as:
- Transfer of jointly held property (except property held jointly by spouses)
- Transfer of remainder after death of life tenant
- Transfers made within 1 year before the decedent's death for nominal or no consideration
Inheritance Tax Liens on Real Estate
Attachment
According to a letter from the Pennsylvania Department of Revenue's Deputy Chief Counsel dated May 1, 2018 ("2018 Letter"), the lien attaches at the time of the decedent's death. The lien is secret or hidden because it cannot be ascertained until an Estate is opened and the subject property is reported to the Department.
Duration
The Department's lien for inheritance taxes lasts until twenty (20) years after an Estate is opened and the inheritance tax return is filed.[2] If the Department takes action within twenty (20) years (i.e. files a formal lien), then the lien becomes indefinite.[3]
If there are bonafide purchasers of a parcel which was not reported in an opened Estate and more than 20 years and 9 months have passed since the date of death, the Department will abstain from looking to the property for future collection activities.[4] The Department does not consider any purchaser acquiring the Property directly from an Estate, or a transferee from a decedent as a "bonafide purchaser".
Underwriting Tips
Although taxes for the entire Estate attach to all of the Estate's property, the Department is required to issue a certificate releasing a specific piece of property when taxes are paid on the full value of that property without any deductions.[5]
Property that would be subject to the "lookback" for gifts made within 1 year of the decedent's death[6] is not subject to the lien in the hands of a bonafide purchaser or mortgagee from the transferee.[7]
- ↑ See, e.g., 72 P.S. §§ 9107, 9108. The transferee of property subject to taxation must file a return for any property not included in the Personal Representative's return. See 72 P.S. § 9136(a)(2)
- ↑ See 2018 Letter
- ↑ See 2018 Letter; 72 P.S. § 1404.1
- ↑ See 2018 Letter
- ↑ See 72 P.S. § 9175(c),(d)
- ↑ See 72 P.S. § 9107
- ↑ See 72 P.S. § 9172
