Information on Inheritance Tax on the Sale of a Property

Selling inherited property may include some tax liability.

Inheriting a property may come with some tax liabilities. These may include capital gains taxes on the sale of a property or state inheritance taxes.

Fair Market Value

The tax basis of inherited property is the fair market value of the real estate at the time of death. Therefore, there is usually little or no gain to report if the property is sold soon after date of death, according Internal Revenue Service (IRS).

Short or Long Term

Capital gain or loss can be classified as either long or short term. A capital asset held for one year or less is considered a short-term asset, according to the IRS. However, an inherited property is considered a long-term asset regardless of how long it was actually held.

State Inheritance Tax

Only a few states still have an inheritance tax in place for inherited homes sold. However, for states that still do there are usually exemptions for close relative heirs, such as spouse, children and parents, according to The San Diego Union-Tribune.

References

• Internal Revenue Service: What Happens If I Sell Property that I Have Inherited?
• Internal Revenue Service: Publication 544
• The San Diego Union-Tribune: No Estate Tax Due on Inheritance