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Author: dcampb91 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121339  
Subject: Inherited property note Date: 2/20/2007 11:51 AM
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Hi, and pardon me if this isn't the correct forum for this.

I inherited a note from my grandmother. She self-financed some land that she sold to friends. She passed away, and her estate didn't incur any estate taxes. I know I don't need to pay any tax on the value of the property, but do I pay tax on the interest?

Thanks
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 92354 of 121339
Subject: Re: Inherited property note Date: 2/20/2007 12:09 PM
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I inherited a note from my grandmother. She self-financed some land that she sold to friends. She passed away, and her estate didn't incur any estate taxes. I know I don't need to pay any tax on the value of the property, but do I pay tax on the interest?

Yes.

Phil

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Author: dcampb91 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 92356 of 121339
Subject: Re: Inherited property note Date: 2/20/2007 1:35 PM
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Thanks. I am assuming that's because I technically still own the property? I was hoping the answer would be no, because the asset I inherited is actually the P+I of the note.

If you know off the top of your head, could you tell me where I can find this at IRS.gov? I can't find anything.

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 92357 of 121339
Subject: Re: Inherited property note Date: 2/20/2007 2:17 PM
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I am assuming that's because I technically still own the property?

I was assuming that you own the note, not the property securing the note. IOW, I assumed that your grandmother took back a mortgage on the sale of the property. The buyer owns the property, and you own the note through inheritance. The IRS references on this would be Publications 525, 550 and 551.

If, OTOH, your grandmother sold the property on a contract for deed and you do, in fact, now own the underlying property, it sounds like an inherited installment sale, and that's beyond my pay grade.

Phil

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