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Taxes can be overwhelming, especially when dealing with inherited property. But don’t worry, we’ve got you covered! In this week’s CARE team update, we spoke with Latoya Tillette, an IRS enrolled agent with over 22 years of experience in tax and accounting, to discuss crucial updates for the 2025 tax season and actionable advice for inherited property owners. Whether you’re navigating tax implications or converting inherited properties into rental income, there’s plenty to learn. Let’s dive in!
Meet Latoya Tillette: A Specialist in Taxation and Global Real Estate
Latoya Tillette is an IRS enrolled agent specializing in taxation for small business owners and real estate investors. Her journey into the tax world began after personal experiences with incorrect filings left her owing the IRS. Determined to take control, she studied taxation and built a career helping others avoid similar pitfalls.
Latoya’s expertise is rooted in real estate taxation, including rental properties, commercial real estate, and inherited properties. She emphasizes the importance of working with specialists, sharing, “There’s no way any tax professional knows everything about the 72,000-page tax code. That’s why we pick areas to specialize in.”
Key Tax Updates for 2025
With tax season approaching, here are the top updates you need to know:
Child Tax Credit: Currently at $2,000 per child, there’s been talk of increasing it to $3,610. However, as of now, the increase hasn’t been approved.
Tax Bracket Changes: Middle- and lower-income earners may face higher tax liabilities, while those earning over $300,000 may see tax decreases. Be prepared for potential shifts in what you owe.
Filing Deadlines: Tax season officially starts January 27th, 2025. Refunds for those with earned income credit or self-employment income may not arrive until late February or early March.
Capital Gains Tax: What Inherited Property Owners Should Know
One of the biggest challenges for inherited property owners is managing capital gains tax. Latoya explains, “If your grandparents bought their home for $100,000 and it’s now worth $600,000, the $500,000 difference is considered a capital gain. Depending on your tax bracket, you could owe anywhere from 0% to 20% in taxes on that amount.”
To avoid this hefty tax bill, consider holding onto the property. Renting it out can provide steady income while delaying capital gains taxes. Additionally, if the property was your primary residence, there may be ways to significantly reduce or eliminate the tax burden.
Converting Inherited Properties into Rental Income
Many people choose to turn inherited properties into rental income, and for good reason. This strategy can help you avoid immediate capital gains taxes and build long-term wealth. However, Latoya suggests considering one key strategy: trusts.
“Holding properties in a trust, rather than an LLC, can offer significant tax benefits,” she notes. “LLCs are not always beneficial for single owners and may still expose you to self-employment taxes. Trusts, on the other hand, allow for better asset protection and potential tax savings.”
International Property Inheritance: What You Need to Know
If you’ve inherited property abroad, don’t overlook IRS reporting requirements. Latoya warns, “The IRS wants to know about all your income, no matter where in the world it’s earned.” Key considerations include:
Tax Treaties: Some countries have tax treaties with the U.S., which can help you avoid double taxation.
Foreign Tax Credit: If you’ve already paid taxes in the country where the property is located, you may qualify for a credit on your U.S. tax return.
Reporting Requirements: Ensure you comply with the Foreign Bank Account Report (FBAR) and any other applicable rules.
Maximizing Deductions for Inherited and Rental Properties
Record keeping is your best friend when it comes to maximizing deductions. Latoya shares these practical tips:
Document all expenses, including property taxes, utilities, and repairs.
Keep receipts and backup records electronically to ensure they’re legible over time.
Consider working with a tax professional who specializes in real estate to identify often-overlooked deductions.
“The IRS can look back up to 10 years,” Latoya points out. “Having clean, organized records will save you headaches and money in the long run.”
Final Thoughts: It’s Okay to Pay Taxes!
One myth Latoya wishes more people would let go of? The idea that paying taxes is a bad thing. “If you owe taxes, it means you’re making money. The goal isn’t to avoid taxes entirely but to pay your fair share while taking advantage of legal deductions and credits,” she explains.
As you navigate tax season and inherited property decisions, remember that preparation and expert advice make all the difference. Don’t let misinformation from social media influencers lead you astray—work with qualified professionals to protect your assets and build generational wealth.
Ready to Get Started?
Have more questions about inherited properties, tax deductions, or rental income? Connect directly with Latoya Tillis at Income Care Unit. From estate taxes to small business filings, Latoya can help you navigate even the most complex tax scenarios.
What tax challenges are you currently facing? Drop your questions in the comments below or reach out for personalized guidance. Let’s make 2025 your most financially savvy year yet!
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