Updated September 2026 · By Chris Romany, Founder of House Solutions USA · Buying houses in Central Florida since 2013
The Short Answer
Most heirs who sell an inherited house in Florida owe little or no capital gains tax. The IRS sets your starting point (your “basis”) at the home’s market value on the date the owner died, not what they paid decades ago, so only growth after that date can be taxed. Any gain is taxed at long-term rates of 0%, 15% or 20%, even if you sell the week after inheriting. Florida has no state income tax, so the federal government is the only one taking a cut.
This guide explains how the tax works, walks through a Central Florida example with real numbers, and shows the legal ways to shrink the bill. It is written for heirs in Orange, Seminole, Osceola, Polk and South Lake counties, including heirs who live out of state. If you are still sorting out who can sign the deed, start with our complete guide to selling an inherited house in Florida.
Please note: We are house buyers, not tax experts. This article is general education only. Always consult a CPA before making decisions that affect your taxes.
What Changed in 2026
- The tax brackets moved up with inflation. The income level where your gain is taxed at 0% now reaches $49,450 for a single filer and $98,900 for married couples filing jointly. The rates themselves did not change: still 0%, 15% and 20%, plus a 3.8% surtax on high earners.
- Estates that file a federal estate tax return must report values to heirs. The IRS says that in those cases, heirs generally receive a form (Schedule A of Form 8971) and must use the value on it as their starting basis (IRS Publication 551). Only very large estates file, so most Central Florida families never see this form.
- Probate got easier for smaller estates. Florida’s summary administration limit doubled to $150,000 on July 1, 2026. That is a court issue, not a tax one, and it is covered in the guide linked above.
How the Stepped-Up Basis Works
Capital gains tax is charged on the difference between what you sell for and your “basis.” When you buy a house, your basis is what you paid. When you inherit one, it resets. The IRS says the basis of inherited property is generally its fair market value on the date the owner died (IRS Publication 551). Tax people call this the “step-up.”
That reset matters in Central Florida. A house bought in 1988 for $95,000 may have been worth $340,000 when the owner passed away. Your basis is $340,000, not $95,000, so the growth that happened during their lifetime is never taxed.
Three details that trip up heirs:
- Get the date-of-death value in writing. Hire a licensed appraiser to value the house as of the date of death. Keep the report with your tax records. Without it, you have nothing to show the IRS if you are ever asked.
- The estate may choose a later valuation date. An executor of a large estate can elect an alternate date, and heirs then use that value. This only applies to estates required to file a federal estate tax return.
- One exception: gifts back to the owner. If you or your spouse gave appreciated property to the owner within one year before they died, you don’t get the step-up (IRS Publication 551).
Any gain you do have is long-term. The IRS treats inherited property as held for more than one year, so selling the month after you inherit still qualifies for the lower rates.
A Central Florida example
Say your mother bought a home in Winter Park in 1988 and it was worth $340,000 on the day she died. Here is what two heirs might owe. These figures are illustrative, not a quote.
| Heir A sells 6 months later | Heir B holds 3 years, then sells | |
|---|---|---|
| Sale price | $352,000 | $410,000 |
| Selling costs (6% agent and closing) | $21,120 | $24,600 |
| Net proceeds | $330,880 | $385,400 |
| Starting basis (date-of-death value) | $340,000 | $340,000 |
| Capital improvements (new roof) | $0 | $18,000 |
| Adjusted basis | $340,000 | $358,000 |
| Taxable gain | None (sold below basis) | $27,400 |
| Federal tax at 15% | $0 | $4,110 |
Heir A owes nothing because the house sold for about what it was worth at death. Heir B owes $4,110, and only because the house grew in value after the inheritance and they held it for three years. Heir B also paid three years of property taxes, insurance and upkeep, which likely cost more than the tax bill.
2026 Federal Rates on an Inherited House
Your gain is taxed at the rate that matches your total taxable income for the year, including the gain itself. These are the 2026 long-term thresholds, set by the IRS in Revenue Procedure 2025-32:
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 | Up to $66,200 |
| 15% | $49,451 to $545,500 | $98,901 to $613,700 | $66,201 to $579,600 |
| 20% | Over $545,500 | Over $613,700 | Over $579,600 |
Two things to know about this table:
- Your gain stacks on top of your other income. If your paycheck already puts you at $120,000 of taxable income, the first dollar of inherited-house gain is taxed at 15%, not 0%.
- Crossing a line only affects the dollars above it. Going over $545,500 does not tax your whole gain at 20%.
The 3.8% surtax. High earners may also owe the net investment income tax. It applies to the smaller of your net investment income or the amount your modified adjusted gross income exceeds $200,000 (single or head of household) or $250,000 (married filing jointly). The IRS lists gains from selling real estate as net investment income, unless the property was held in an active business (IRS Topic 559). For a typical Central Florida heir, the tax on this sale is 0% or 15%.
What about short-term rates? You may have read that selling within a year of inheriting means higher short-term tax. For inherited property, that is not the case. The holding period is treated as long-term from day one.
State tax. Florida has no state income tax, so nothing is owed here. If you live in another state, your home state may tax the gain. Ask your CPA.
How to Lower the Tax, and Special Situations
Legal ways to reduce your gain
- Sell sooner. Your basis is frozen at the date-of-death value. Every month you hold, the house can grow past that number, and only that growth is taxed. You also keep paying taxes, insurance and utilities.
- Subtract your selling costs. Agent commissions, title fees, recording fees and similar closing costs reduce your gain.
- Add capital improvements to your basis. The IRS counts things like replacing an entire roof, adding central air conditioning, rewiring or paving the driveway as basis increases. Routine repairs and cosmetic work don’t count (IRS Publication 551). Keep every receipt.
- Live in it. If you move in and use it as your main home for at least two of the five years before you sell, you may be able to exclude up to $250,000 of gain ($500,000 for a qualifying married couple). This only makes sense if you actually want to live there. See IRS Publication 523.
- Keep it as a rental and exchange into another investment property. A 1031 like-kind exchange can defer the tax, but both properties must be held for business or investment, and it doesn’t work for a home you live in (IRS Publication 551). Rental depreciation also lowers your basis, which can raise your tax later.
Situations that change the math
- Jointly owned by a married couple. When one spouse dies, only the deceased spouse’s half of a jointly held home gets the step-up in basis in Florida. The survivor’s half keeps its original cost basis (IRS Publication 551).
- Several heirs. Each heir reports their own share of the sale and their own share of the basis. One written appraisal that everyone sees avoids arguments, as we explain in our guide for Florida heirs.
- You live out of state. Your home state may tax the gain even though Florida doesn’t. Plan for that before you sign a contract.
Should you keep it or sell it?
Tax should not be the only reason you decide. If the house needs a new roof and sits vacant, the carrying costs usually outweigh any tax you might save. Property taxes often jump after the owner dies because the house is reassessed at full market value. Insurance can lapse on vacant homes, and Florida’s hurricane season runs through November 30.
Keeping it makes sense if a family member will live there, or if you are comfortable being a landlord: the tenants, toilets and termites that come with it. If you’d rather not, selling as-is is usually the simplest path. A cash sale also means no agent commission and no repair bills.
How House Solutions USA Helps Heirs Sell
We have been buying houses in Central Florida since 2013, and inherited homes are a large share of what we buy. Taxes are one worry among many for heirs, so we keep the sale itself simple:
- Call 407-738-1581 or fill out our cash offer form. Tell us about the house and where the estate stands.
- We see the house once, at your convenience, and you leave behind anything you don’t want.
- You get a written offer on the standard Florida contract. You decide whether it makes sense.
- We work around probate. Once someone has legal authority to sign, a sale can close in as little as 7 days.
- A local title company closes the sale. We pay the closing costs and you choose the date.
We buy inherited houses in Orange County, Seminole County, Osceola County, Polk County and South Lake County.
Frequently Asked Questions
No. Florida has no inheritance tax, estate tax or state income tax. The federal estate tax only affects estates above $15 million for people who die in 2026 (IRS). You only owe capital gains tax if you sell for more than your basis.
It is the reset of your cost for tax purposes to the home’s market value on the date the owner died. Only growth after that date is taxed.
Hire a licensed Florida appraiser to value the house as of the date of death, and keep the written report. If the estate filed a federal estate tax return, the executor may give you a form showing the value to use.
Usually little or nothing. If the house sells for about what it was worth at death, your gain is close to zero after selling costs.
No. Inherited property is treated as held for more than one year, so any gain is taxed at the lower long-term rates of 0%, 15% or 20%.
Big improvements, like a whole new roof, increase your basis. Routine repairs and cosmetic fixes do not. Keep all receipts and ask your CPA how to classify each one.
No. A sale is a sale. The same basis and rates apply. The difference is what you keep: a cash sale with us means no agent commission and no repair bills.
Florida won’t tax the gain, but your home state might. Ask a CPA who handles multi-state returns.
Disclaimer: House Solutions USA is a home buying company. We are not CPAs, tax advisors or attorneys, and nothing in this article is tax or legal advice. Tax rules change and every situation is different. Before you make any decision that could affect your taxes, including whether to sell, when to sell or how to report a sale, consult a licensed CPA or tax professional. For court, probate and title questions, talk to a Florida probate attorney.