Pennsylvania inheritance Law Interpretation

5 Replies

For those who invest in Pennsylvania, just wanted to post a PSA

Below is a link to an article but to break it down in a nutshell:

If you are a lender and the borrower is deceased and you foreclose on the property, the winner at auction is responsible to pay a 15% inheritance tax on appraised value.

Now in most instances it’s the lender who is the winner at auction as they take the property back. So the lender would be responsible for this - in speaking with my attorney (not related to link below) you would not be able to sell it with clear title until the inheritance tax is paid.

Yes this is crazy but it’s how it’s being interpreted right now until challenged in court

https://www.lenderlaw.com/post/new-department-of-revenue-policy-complicates-foreclosure-sales?fbclid=IwAR1U5OwC_Xjno8UCW43lypOtfAxEy8Pg90KpDF9sfzC1oYHRyqZ0GxbJMok

Wow government run amok. 

@Chris Seveney I went to the link and also to the PA dept of revenue and saw nothing about a 15% tax. I did find this form https://www.revenue.pa.gov/For... for a release of line but no details on how it works.

Also I found an old letter ruling here https://www.revenue.pa.gov/Gen...  that says after 20 years the state can no longer pursue a lien

Another tax grab in this illustrious state that already taxes the crap out of you with impound fees and transfer taxes.....

@Ned Carey

My attorney has said it’s a new Interpretation and is even being done on tax sales

Here is what I found about 15% (staggered rate but non exempt entities are 15%)

https://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/InheritanceTax/Documents/rev-720.pdf

@Bruce Lynn

It is, but now it’s going to take someone to fight it in court which will cost some money. I would assume over next 12-18 months when we see more fc take place it will get contested