Florida has no estate tax and no inheritance tax
Florida repealed its estate tax years ago and has never had an inheritance tax, so the State of Florida takes nothing when a house passes to heirs or when they sell it. If the person who died lived in another state, that state’s rules may apply to their estate, but not to the Florida house in any way that Florida collects.
Federal estate tax: almost no one pays it
The federal estate tax applies only to estates above the exemption amount — $15 million per person for deaths in 2026, indexed in later years. An ordinary house, a car, and some savings don’t come close. The estate’s attorney or CPA will confirm whether an estate-tax return is even required; for most families it is not.
The stepped-up basis: why you usually owe little or nothing when you sell
Under Internal Revenue Code § 1014, property you inherit takes a new tax basis equal to its fair market value on the date of death. Your parents’ original purchase price and all their years of appreciation don’t matter. When you sell, your capital gain is only the difference between the sale price and that date-of-death value, minus selling costs.
| Example | Amount |
|---|---|
| Parents bought the house in 1989 for | $70,000 |
| Fair market value on the date of death | $300,000 (your new basis) |
| You sell eight months later for | $290,000 |
| Gain (loss) for tax purposes | ($10,000) — a loss, no capital gains tax |
Because inherited property is automatically treated as held long-term, any gain that does exist is taxed at long-term capital gains rates, not as ordinary income. A sale below date-of-death value can produce a deductible loss for the heirs (not for the estate selling a residence to a related party — ask a CPA).
Document the date-of-death value. A date-of-death appraisal, or at minimum a broker’s opinion and the property appraiser’s just value, is cheap insurance if the IRS ever asks how you set your basis. Our offer letter also states the as-is value we used, which heirs have found useful.
If the estate sells the house, not the heirs
In formal administration, the personal representative often sells the house in the estate’s name. The estate gets the same stepped-up basis, reports any gain on the estate’s income tax return (Form 1041), and the gain or loss generally passes through to the beneficiaries on a Schedule K-1 in the year the estate closes. Either way, the step-up applies.
Short version: if you want the house sold, we pay for the probate and get the attorney working within 24 hours — call or text (727) 353-6206, or use the form.
The tax that does go up: property tax
Florida’s Save Our Homes cap limits annual assessment increases on a homestead to 3%. Many long-time owners are assessed far below market value. When the owner dies, the exemption and the cap end. Unless an exception applies (a surviving spouse who keeps living there, for example), the house is reassessed at full market value as of the next January 1 (§ 193.155); an heir who moves in and files for a new exemption starts a fresh cap from that higher number. A house your parent paid $1,800 a year on can cost an estate $5,000 or more the next year, in addition to the loss of the homestead exemption itself. If the plan is to sell, selling before the reassessment takes hold is worth real money.
Heirs who live outside the United States (FIRPTA)
If an heir is not a U.S. citizen or resident, the buyer is generally required to withhold 15% of the sale price under FIRPTA and send it to the IRS, unless the heir obtains a withholding certificate (Form 8288-B) showing the actual tax due is lower — which, with a stepped-up basis, it usually is. We have closed with heirs overseas and know how to handle the paperwork; start early, because the IRS certificate can take months.
Other tax notes
- Final income tax return for the person who died is still due for the year of death; the estate may need its own return (Form 1041) if it earns income — including gain from a house sale.
- Documentary stamp tax on the deed when the house sells (70 cents per $100 of price) is a seller’s closing cost in most of Florida. We pay normal closing costs, including this one.
- Rental income if the house is rented while the estate is open is taxable to the estate or heirs.
We are not tax advisors and this is not tax advice. The numbers above are for orientation; please confirm your own situation with a CPA, and let the estate’s attorney coordinate with them.
Questions people ask
Do I pay capital gains tax on an inherited house in Florida?
Only on the gain above the house’s fair market value at the date of death (the stepped-up basis), and only at long-term capital gains rates. Selling soon after death for roughly that value usually means little or no tax. Florida itself has no capital gains, estate, or inheritance tax.
Is there an inheritance tax in Florida?
No. Florida has no inheritance tax and no state estate tax. Only estates above the federal exemption (many millions of dollars) owe federal estate tax.
How is the stepped-up basis determined for an inherited house?
By the fair market value on the date of death — typically shown with a date-of-death appraisal, a comparable-sales analysis, or the property appraiser’s just value. Keep documentation with your tax records.
Do I have to report the sale of an inherited house to the IRS?
Yes. The title company issues a Form 1099-S and you (or the estate) report the sale, with the stepped-up basis, on Schedule D / Form 8949. Even a sale with no gain should be reported.