My husband and I live in Maryland. His godfather lived in New Jersey. His godfather passed away earlier this month, leaving 2/3 of his estate to my husband and 1/3 of his estate to my husband’s brother. My father-in-law is the executor of the estate, and does not wish to usa an attorney in the process.
We are planning to begin the process to sell the deceased’s house as soon as probate has gone through. My husband and I currently own two residences in Maryland, one of which we maintain as a rental property. We have a remaining mortgage of approximatley $100,000 to $120,000 on each property. We have looked into paying one of these mortgages off from the inheritance. Our accountant has advised us to pay off our primary residence – which is supposedly better fo us in terms of using the rental property for a tax write-off.
We are trying to make the most of this inheritance by paying the minimum in estate/inheritance tax when the sale goes through on the house in New Jersey. I have two questions,.
Does anyone know if we are in danger of being taxed twice on this inheritance – Once from New Jersey since the sale will take place there and once from Maryland since that is our residence? If so, is there a way to avoid this?
Second, We are considering adding to the HUD(1) settlement document for the New Jersey house that 2/3 of the proceeds go directly towards our mortgage debt. My husband has been told this may keep us from, or at least lower lower, what taxes we will pay.
Does anyone know the answers to these questions, or better yet, where I can find documentation pertaining to them? What I have found so far has not been very helpful.
Thank you!
