sell inherited house

Forum|Forum|2 months ago
May 13, 2026
1 reply
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if i sell a house i inherited, do i pay taxes on that income?

Ask the Experts - W4 - May 2026

SwapnaM

Employee Tax Expert

Yes—you may owe taxes, but not necessarily on the full sale amount. It depends on a special rule for inherited property. The IRS "steps up" the value of the house to its Fair Market Value (FMV) on the day the owner passed away.

You are only taxed on Selling Price-stepped up cost basis= taxable gain. For example,

House value when inherited: $300,000
You sell it for: $320,000 Taxable gain is 20000

When calculating your gain, you can subtract commissions, closing costs, and attorney fees from the sale price.The IRS automatically considers inherited property a "Long-Term Capital Gain," which means you pay a lower tax rate (usually 0%, 15%, or 20% depending on your income) rather than your standard income tax rate.

@Amjm-rhit Thanks for the question!!

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