What heirs actually owe — and what the step-up rule eliminates.
Plain-language tax guides for inherited property. Calculators included. Not tax advice — always confirm with a licensed CPA.
What you really need to know.
Most heirs overestimate how much tax they'll owe when selling an inherited house. The reason is the step-up in basis rule (IRC §1014): the property's tax basis resets to its fair market value on the date of the original owner's death. That means if you sell soon after inheriting, the taxable gain is usually small — sometimes zero — even if the house appreciated dramatically while it was owned.
Two other things to know: capital gains on inherited property are always treated as long-term, regardless of how long you've actually owned it, and inheritance tax (paid by the heir, in only six states) is different from estate tax (paid by the estate, federal threshold over $13M in 2025). Most heirs owe neither.
For specific situations — selling at a loss, trust-held property, no documented basis, or 1031 exchange feasibility — full guides are being added to this section.
The full tax library.
Capital Gains Tax on Inherited Property: The Plain-English Guide
How capital gains tax works on an inherited house, what the step-up rule eliminates, and how to estimate what you'll actually owe.
Step-Up in Basis: The Rule That Saves Heirs the Most Money
The step-up in basis resets an inherited property's tax basis to fair market value at death. Here's how it works, with a worked example.
How to Avoid (or Minimize) Capital Gains on an Inherited House
Six legal strategies to reduce or eliminate capital gains tax when you sell an inherited property, from selling quickly to a 1031 exchange.
Inheritance Tax vs. Estate Tax: What's the Difference?
Estate tax is paid by the estate before assets transfer. Inheritance tax is paid by the heir after. Most U.S. heirs owe neither.
Reporting the Sale of an Inherited House: Form 8949 & Schedule D
Step-by-step walkthrough of reporting an inherited house sale on Form 8949 and Schedule D, including how to mark the basis as inherited.
1031 Exchange on Inherited Property: When It Works
When a 1031 like-kind exchange works for inherited real estate, what disqualifies it, and how the step-up changes the math.
Holding Period on Inherited Property: Always Long-Term
Inherited property is automatically long-term for capital gains purposes, even if you sell the day after inheriting. Here's the IRS rule.
Selling an Inherited House at a Loss: Is the Loss Deductible?
When you can deduct a loss on the sale of an inherited house, how the IRS distinguishes investment vs personal use, and what to file.
Inherited House Held in a Trust: Tax Treatment Differences
How tax treatment changes when an inherited house was held in a revocable vs irrevocable trust, including step-up rules.
No Date-of-Death Appraisal? Here's How to Document Basis
How to establish a stepped-up basis for an inherited house when no date-of-death appraisal was ordered.
State Inheritance Tax by State (2025)
Only six U.S. states levy inheritance tax. Here are the current rates, exemptions by relationship, and phase-out schedules for each.
State Estate Tax by State (2025)
Twelve states plus DC levy estate tax beyond the federal $13.99M exemption. Thresholds, top rates, and portability rules by state.
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