Learn the definition of taxable property, qualified exemptions, and how to determine the tax on property held in joint tenancy.
All real property and all tangible personal property, including but not limited to cash, automobiles, furniture, antiques, jewelry, etc., located in Pennsylvania are taxable.
All intangible property including stocks, bonds, bank accounts, loans receivable, etc., is taxable regardless of where it is located.
Jointly-owned property, except between husband and wife, including but not limited to real estate, securities, bank accounts, etc., with right of survivorship, is taxable. Joint property is taxable even though the decedent's name was added as a matter of convenience.
Property owned by husband and wife with right of survivorship is exempt from Inheritance Tax unless the joint ownership was created by the decedent within one (1) year of the decedent's death.
Life insurance proceeds payable to a named beneficiary as well as to the decedent's estate are tax exempt.
Life Insurance Exemption
Life insurance proceeds are exempt from the Pennsylvania Inheritance Tax provided that the decedent died after December 13, 1982.
As a general rule, if the joint tenancy was established more than year before death, the decedent's fractional portion of joint property is subject to tax. The fractional portion is determined by dividing the value of the property by the number of joint tenants regardless of their contribution.
Decedent died on 07/07/00. The only asset was interest in a joint savings account held with son, with right of survivorship. Gross value of account, including interest to date of death was $20,500. Account was opened on 03/06/94. Surviving son paid $4,200 for father's burial after the funeral.
Gross appraised value of 1/2 interest in savings account as of 10/07/00: $10,250.00
Less funeral bill allowed as deduction: -$4,200.00
Clear value of estate for tax purposes: $6,050.00
Inheritance Tax due as of 10/07/00 from son: $272.25
Less Discount of 5%: -$13.61
Half of the joint account is subject to tax. The funeral bill is an allowable debt. Tax is imposed at 4.5% for lineal heirs, and 5% discount is permitted since payment was made within 3 months of the date of death.