How Do You Value Property for an Estate in Ohio?

Inez Bowie | September 5th, 2012

Recently, a reader shared with us that she inherited property in both Ohio and Florida. She had a pretty specific question related to the value of the Ohio property. That question made me think there may be more people who don’t know how to handle newly inherited property for estate tax purposes. Hence, I’m going to provide some general estate information I hope will help.

According to Ohio law, “the value of any property included in the gross estate shall be the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.”

Now, let me put that in simpler terms. If there is real estate in an estate, then you need to claim its fair value. That value is the amount the property would sell for assuming both the buyer and seller know about the property and neither was pressured to either buy or sell.

Determining Real Estate Value for Ohio Estate Tax

One place you could turn to determine this value would be your county auditor. By law, each county auditor is required to reappraise all real property every six years and update values every three years. When using that number for an estate, you have to realize that the value is current as of the last appraisal or value update. That makes it very likely that the auditor’s appraised value may not be reflective of the property’s value on the day the individual died.

It is common to see the county auditor’s value used on Ohio estate tax returns. However, each piece of real estate is unique which often impacts its value. To get the most tax savings, consider an appraisal by a qualified appraiser.

Typically, real estate makes up a significant part of a person’s estate, so it’s a number you want to get right. An appraisal is an unbiased estimate of what a buyer would spend on the property or a seller can expect from the sale of the property. Appraisers inspect the property and use what they see to come up with an estimated market value.

The Ohio Estate Tax is Still In Effect…for a While

The Ohio Estate Tax has been repealed, but it’s not effective until Jan. 1, 1013. So if a person dies prior to Jan. 1, 2013, and the estate exceeds $338,333, an estate tax return must be submitted. This tax form is the responsibility of the executor or administrator of the estate.

Not only do you have to include any Ohio real estate on the return, but also other assets like bank accounts, cars, boats, furniture, stock, life insurance proceeds, business interests and trust assets. While it does take time to gather this information, it’s important to note that the estate tax return is due 15 months after the date of death, which includes an automatic extension. Before you think you have 15 months, you need to recognize that interest on any tax due begins to accrue after nine months and continues until the time the payment is made. Filing the return or making an extension payment within nine months will save you money if tax is due, and that’s something you need to consider.

If a married person dies and leaves everything to a surviving spouse, no estate tax is due. However, if the gross estate assets exceed the $338,333 threshold, an estate tax return must still be filed claiming the marital deduction.

Ever Changing Estate Tax Laws

Estate taxes have seen their ups and downs over the years at both the federal and local level as one group of legislators believes an estate should be taxed and the next doesn’t. Chances are Ohio’s estate tax laws will see changes again at some point in time as future legislative bodies attempt to do what’s best for the state at that time.

With the complexity of the laws along with the way the laws change often, it makes sense for executors of larger estates to work with an estate tax attorney and an estate tax accountant to ensure they are complying with laws but not overpaying any tax due. And I cannot stress enough how a solid estate plan developed and reviewed prior to an individual’s death can make a tremendous difference. So plan ahead and encourage your loved ones to do the same.

Ohio Estate Tax Planning Help

If you need assistance with Ohio estate tax planning, contact Rea & Associates.  Our Ohio tax team can help you develop an estate tax plan that maximizes the amount that you leave your family and minimizes Uncle Sam’s piece of it.  Since Ohio’s estate tax laws are always changing, it’s important that tax planning is not a one-time event, but an ongoing process.

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