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Capital Gains on an Inherited House, Estimated
Inherited property resets its tax basis to the value at the owner's death. Run your numbers and see what that rule does to the tax bill.
The rule most heirs half-remember is real and generous: inherited property generally receives a stepped-up basis — for tax purposes, its cost resets to fair market value at the date of death. The decades of appreciation the previous owner accumulated are generally never taxed to you. Only what happens after the date of death is.
This calculator applies that rule: it measures your estimated gain from the stepped-up basis, not from what the original owner paid, and estimates federal tax at the long-term rate you select — inherited property is automatically treated as long-term, however briefly you've held it. It is an educational estimate, not tax advice; every estate has specifics a tax professional should confirm.
Fair market value when the owner died — a retrospective appraisal documents it.
Commission, closing costs, and sale-related fees reduce the gain.
Capital improvements you paid for add to basis. Repairs don't.
Inherited property is automatically long-term, however soon you sell.
The gain, measured from the step-up
Estimated federal tax
$0
No estimated gain at these numbers — selling near the date-of-death value often produces exactly this result.
How this calculator works
Taxable gain = sale price − selling costs − (stepped-up basis + improvements you made after inheriting). Basis is the fair market value at the date of death — a retrospective appraisal is the standard way to document it, and getting one now is far easier than reconstructing the value years later. Estimated federal tax = gain × the long-term capital gains rate you select (0%, 15%, or 20%, by income), with an optional 3.8% net investment income tax for higher incomes.
What this deliberately leaves out: state income taxes (a handful of states tax gains meaningfully; Florida taxes none), depreciation recapture if you rented the property after inheriting (a different regime entirely), and estate or inheritance taxes (separate taxes, mostly affecting large estates or specific states). If any of those apply to you, the number here is a floor, not the answer — take it to a tax professional.
Estimates are educational, not financial, legal, or tax advice, and not an offer to purchase. Actual figures depend on your property, market, and situation — confirm anything consequential with a licensed professional.
Common questions
Do I pay capital gains tax when I sell an inherited house?
Often little or none — if you sell reasonably soon after inheriting. The stepped-up basis resets your cost to the value at the owner's death, so tax applies only to appreciation after that date, minus selling costs. Sell near the date-of-death value and the taxable gain is frequently close to zero. Hold the house for years of appreciation first, and the gain — and the tax — grows.
Is an inherited house long-term or short-term for capital gains?
Long-term, automatically. Federal law treats inherited property as held long-term regardless of how quickly you sell, which means the lower long-term rates (0%, 15%, or 20% by income) apply rather than ordinary income rates — one of the few unambiguous breaks in the tax code.
How do I prove the value at the date of death?
A retrospective (date-of-death) appraisal by a licensed appraiser is the standard evidence, and estates often need one anyway. Order it as early as possible — appraisers can value a past date, but the documentation is cleaner when the request comes months rather than years later. County assessments and online estimates are weaker support if the IRS ever asks.
Does selling an inherited house count as income?
Only the gain does — not the sale price. Receiving the inheritance itself is not federal taxable income, and the proceeds up to your stepped-up basis are simply your own money back. What appears on your return is the capital gain, if any, which is exactly the number this calculator estimates.
The tax math favors selling sooner — see what sooner pays
The longer the house sits, the more gain accrues past the stepped-up basis. Get matched with cash buyers who close in weeks — free, no obligation, written offers to compare.
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