Your capital gains tax rate can be 0%, 15% or 20% depending on your income and your tax filing status.
To calculate capital gains tax liability, you begin with the tax basis (sometimes called cost basis) of the inherited property. This is the original purchase price of an asset, plus any improvements. Fortunately, when you inherit property, this amount is “stepped up.” That means the tax basis is bumped up to its fair market value as of the property owner’s death.
It is better to wait one year before selling the inherited property. After one year, it becomes long-term capital gains which are taxed at a lower rate than short-term capital gains. You are beyond one year so here is a table to help determine what rate you will pay.
Tax Rates for Long-Term Capital Gains 2020
| Filing Status | 0% rate | 15% rate | 20% rate |
| Single | Up to $40,000 | $40,000 to to $441,450 | Over $441,450 |
| Head of household | Up to $53,600 | $53,600 to $469,050 | Over $469,050 |
| Married filing jointly | Up to $80,000 | $80,000 to $496,600 | Over $496,600 |
| Married filing separately | Up to $40,000 | $40,000 to $248,300 | Over $248,300 |
