As the recipient of an inherited property, you'll benefit from a step-up tax basis, meaning you'll inherit the home at the fair market value on the date of inheritance, and you'll only be taxed on any gains between the time you inherit the home and when you sell it.

What are the tax consequences of inheriting a house?

The bottom line is that if you inherit property and later sell it, you pay capital gains tax based only on the value of the property as of the date of death. Example: Jean inherits a house from her father George. He paid $100,000 for it over 20 years ago.

What should I do if I inherit a house?

Taking the Property Through Probate

In most cases, you will have to go through a legal process called probate if you have inherited a house. Some states allow you to take ownership if you have a quick claim deed, which names you as the beneficiary or payable on death.