The Risks of Not Properly Reporting Inherited Property in Maryland

If you inherit property in Maryland, it’s important to be aware of any tax responsibilities that may come with the inheritance. Unreported or misreported tax information can result in liability you hadn’t anticipated.

In Maryland probate, inherited property receives a new tax basis equal to its fair market value at the date of the decedent’s death. This is the starting point for determining any capital gain or loss when the property is later sold. Failure to document the fair market value properly could result in a miscalculation by a beneficiary or draw attention from the IRS for inaccurate reporting.

Remember that while no immediate taxes may be owed when inheriting a property, tax consequences can arise when the property is transferred or sold. If an estate tax return was filed, or the Personal Representative included valuation information to the IRS on Form 8971, the beneficiary must use this reported value as their basis. This can seem like a minor issue but could potentially lead to higher capital gains taxes or IRS penalties.

If you are the Personal Representative for an estate or have recently inherited property, consider contacting a tax specialist and an experienced probate attorney for guidance and peace of mind. For a free, confidential conversation to discuss your inheritance, contact Maryland property law attorney Stephen J. Reichert at 410-299-4959 or sreichert@reichertlegal.com.

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