Estate Tax Uncertainty & Fear Impacts Real Estate Closings

Richard D. Lyons's Real Estate Legal Blogs

Licensed for 22 years

Attorney in Bonita Springs, FL

Richard D. Lyons

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Serving Bonita Springs, FL

  • Serving Bonita Springs, FL

  • Credit cards accepted

Partner at firm Lyons & Lyons, P.A.

Serving Bonita Springs, FL

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During 2010, in accordance with the Economic Growth and Tax Relief Reconciliation Act of 2001, the inheritance tax disappeared for the estates of those U.S. Citizens dying between Dec. 31, 2009 and Jan. 1, 2011.  As of Jan. 1, 2011 the one year hiatus for the estate tax goes away and the law generally reverts back to the exemptions amounts and tax rates of 2001.  However, due to various political and economic causes, there is uncertainty as to whether U.S. Citizens can rely on the law as currently written.  Notwithstanding the apparent conflict with Constitutional Law and the basic sense of fairplay, there are forces that would like to repeal the 2010 hiatus and are making noises that they would attempt to enact the repeal retroactively.  So, here are the concerns for 2010 (I will leave the 2011 concerns for another discussion that focuses on estate planning, not real estate).

  1. Will the current lack of Estate Tax during 2010 be repealed?
  2. If so, will the repeal be enacted retroactively.
  3. Would the unified exemption be last year’s $3.5 million per person or next year’s apparent $1 million per person.

THE POINT:  This uncertainty has reared its ugly head in the form of the recent underwriting guidelines of Attorney Title Fund Services, LLC ("The Fund") and it is highly likely other title insurance underwriters will follow suit.  The Fund’s position is as follows: Due to the possible retroactive application of federal estate tax legislation pending before Congress, Fund Member Agents must, for insuring purposes, treat the 2010 federal estate tax exemption at $1 million with the consequence that all estates exceeding $1 million are potentially taxable.  This means that for every sale of Florida real property in which the estate of a decedent exceeds $1 million, the sale proceeds should be retained by the personal representative for the remainder of 2010 or until a new law is passed, whichever occurs first.  Jalinda B. (Jay) Davis 2010 Federal Estate Tax – Repealed or Subject to Retroactive levy by Congress? 42 THE FUND CONCEPT 2010, at 39.

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