Tax question: Selling a house

[Brock]

Originally Posted by alnorth

Well, I do know that is wrong. Assuming complications like trusts arent involved, if you straight-up inherit a piece of property, stock, almost anything out of probate court, you get a step-up in tax basis. (some exceptions, inherited non-Roth IRA's are still taxable because the contributions were never taxed, and I'm pretty sure inherited annuities are taxed)

In other words, the government treats it as if you "bought" it on the day of death, so future gains are taxed, but the prior gains died with the previous owner and the taxes owed on that if the previous owner would have sold are forever lost to the government.

You dont normally have to worry about estate taxes on inheritances until you get over $3.5M, or $2.5M if the guy who died made lots of huge gifts during his life. (There is a $3.5M exemption to the estate tax, which is reduced by any gifts made over $13,000/year/person up to a million, anything over the million is then hit by gift taxes)

So you're saying there will be no capital gains tax on the sale of the house? Gross sale proceeds minus market value on day of death?