---
title: Will we owe tax when we sell an inherited house?
description: Selling an inherited Northern Virginia home? How the stepped-up basis works, why a sale soon after death usually shows little gain, and what changes if heirs wait.
---

[Northern Virginia Real Estate Insights](https://www.davidzadareky.com/insights)

# [Will we owe tax when we sell an inherited house?](https://www.davidzadareky.com/insights/will-we-owe-tax-when-we-sell-an-inherited-house)

 Written by [David Zadareky](https://www.davidzadareky.com/insights/author/david-zadareky) | Nov 12, 2026, 6:13:09 PM

**Usually little or none, if you sell soon after the death. Inherited property takes a new basis equal to its value on the date of death, so you're taxed only on what it gains after that.**

This is the stepped-up basis. The gain built up during your parent's lifetime isn't taxed to you.

## An illustrative example

A parent bought a house in 1985 for $150,000. It was worth $900,000 on the date of death. The heirs sell it eight months later.

| Sale price | $920,000 |
| --- | --- |
| Costs of sale | −$60,000 |
| Stepped-up basis (value at death) | −$900,000 |
| **Gain or loss** | **−$40,000** |

*All figures are estimates for illustration only and are not tax advice. Confirm with your tax adviser.*

Without the step-up, the gain would have been $710,000. With it, the heirs show a loss after selling costs. Ask your tax adviser whether that loss is deductible in your situation.

## What else to know

- **It's always long-term.** Any gain on inherited property is taxed at long-term capital gains rates, however soon you sell.
- **Waiting adds gain.** If the house rises in value while the heirs hold it, that increase is taxable when they sell. Improvements the heirs pay for are added to the basis.
- **Each heir reports their share.** Heirs who own a share report their part of the gain or loss on their own returns.
- **Virginia has no estate or inheritance tax.** The federal estate tax applies only to estates above $15 million per person in 2026.
- **Revocable trusts keep the step-up.** A house held in your parent's revocable trust generally still gets a stepped-up basis at death.

## If one parent is still living

When a jointly owned home passes to the surviving spouse, generally only the deceased spouse's half is stepped up. [Will I owe capital gains tax when I sell my house?](https://www.davidzadareky.com/insights/will-i-owe-capital-gains-tax-when-i-sell-my-house) walks through that case, including the surviving spouse's two-year window for the $500,000 exclusion.

## Document the value

Get a date-of-death appraisal. It establishes the basis, and it's much easier to get close to the date than years later. A sale on the open market within months of the death is also strong evidence of value.

For more on selling a home after a death, see how I approach [estate sales](https://www.davidzadareky.com/estate-sales).

[**Start a conversation**](https://www.davidzadareky.com/contact)

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