Did Annie Leibovitz Miss a Trick on Estate Taxes?
Dear Ali: I have been out in the blogosphere reading personal finance tales of woe instead of working on my taxes, and I really take the real estate plight of one of America's favorite photographers to heart. Could poor Annie Leibovitz really have escaped paying estate taxes if she had been straight and not gay?
A: Um, no.
Last month's New York Times' story about photographer Annie Leibovitz using her art to secure a loan caused a ka-boom in the blogosphere, with a firestorm of "she wouldn't have been in this trouble if she'd just been able to marry Susan Sontag" comments.
Not exactly. Even those of us who are wearing white knots in the cause of overturning Prop 8 can tell you that no one, straight or gay, can inherit three townhouses in New York City without there being tax consequences.
For one thing, the estate-tax exemption is only $3.5 million, and as depressed as New York City real estate is, that won't even buy you one nice big townhouse.
But it's as good an excuse as any for us all to think about estate taxes and real estate, so head over to Smart Money for their primer. For example, did you know that:
- If you sell to a relative -- say, your kids -- at a bargain price, the IRS considers that a gift for tax purposes?
- That you can seller-finance your gift in such a way that the mortgage interest is tax-deductible to the buyer?
- That if you rent back from a relative, it's to your advantage to pay full market price?