Tax Implications When Selling an Inherited Property in Fort Worth

Understanding How Taxes Work When You Sell an Inherited Home in 2025

Inheriting a home in Fort Worth, Texas can feel like both a blessing and a challenge. While it often provides financial opportunity, it also raises important questions about taxes, property value, and capital gains.

Many homeowners are unsure whether they’ll owe taxes when selling an inherited property — and that confusion can lead to costly mistakes.

This comprehensive 2025 guide explains everything you need to know about tax implications when selling an inherited property in Fort Worth, including how the IRS step-up in basis rule works, when you might owe taxes, and how to reduce or avoid them legally.

If you haven’t yet read the full inheritance process guide, check out the main page here:
👉 How to Sell an Inherited House in DFW — Complete 2025 Guide

Do You Have to Pay Taxes on an Inherited Property in Texas?

The good news: Texas does not have a state inheritance tax or estate tax.

However, you may still owe federal taxes depending on when and how you sell the inherited home. The main taxes that might apply include:

Capital Gains Tax – If the home’s value increased after you inherited it and you sell it for more than that value.
Property Taxes – Ongoing annual taxes based on Tarrant County appraisal values.
Federal Estate Tax – Only applies to very large estates valued over $13.61 million (as of 2024).

For most Fort Worth homeowners, only capital gains tax is relevant when selling an inherited property.

Understanding the Step-Up in Basis Rule

The step-up in basis is the most important IRS rule to understand when inheriting real estate.

When you inherit a home, the property’s tax basis (its cost for tax purposes) is adjusted to its fair market value at the date of the original owner’s death, not the amount they originally paid.

Example:

Your parents bought a Fort Worth home in 1990 for $90,000.
At the time of their death in 2024, the home’s fair market value was $300,000.
You sell the property in 2025 for $310,000.

Your taxable capital gain is only $10,000 ($310,000 – $300,000), not $220,000.

That’s the power of the step-up in basis — it helps reduce or eliminate taxes when selling inherited real estate.

For reference, see the official IRS explanation here:
👉 IRS Publication 551 – Basis of Assets

How to Determine the Fair Market Value of an Inherited Property

To calculate potential capital gains accurately, you must know the property’s fair market value (FMV) as of the inheritance date.

Common ways to establish FMV:

Certified appraisal – Professional appraisers assess condition and comparable sales.
County appraisal – Tarrant County Appraisal District (TAD) publishes annual values.
Comparable Market Analysis (CMA) – A local Fort Worth real estate agent can estimate value.

Keep this documentation — the IRS may request it when filing taxes if you sell the home later.

What Is Capital Gains Tax and When Does It Apply?

Capital gains tax applies when you sell an asset (like a house) for more than your cost basis. The tax amount depends on how long you held the property after inheriting it.

Short-Term vs. Long-Term Capital Gains:

Short-Term: If sold within one year, taxed as ordinary income (based on your income bracket).
Long-Term: If held for more than a year, taxed at 0%, 15%, or 20%, depending on total income.

Most heirs qualify for long-term capital gains rates, even if they sell quickly, because inherited property automatically receives long-term classification per IRS rules.

Reducing or Avoiding Capital Gains Tax

Here are ways to minimize or eliminate capital gains when selling your inherited Fort Worth home:

1. Sell Soon After Inheritance

If you sell shortly after inheriting, there’s little time for the property to appreciate — minimizing taxable gains.

2. Track Selling Costs

Keep receipts for realtor commissions, title fees, and repairs — these are deductible expenses that lower taxable profit.

3. Use the Step-Up in Basis Wisely

Base your gain only on the value at the date of inheritance, not what your loved one paid.

4. Consider the Home Sale Exclusion (If You Lived There)

If you’re not sure how to calculate your basis or file the sale properly, working with professionals who specialize in Texas inheritance and property sales can help you stay compliant while maximizing returns.
For instance, you can review resources from reputable real estate experts like EMR Investments LLC, who provide useful insights into selling inherited and probate properties efficiently across Texas.

What About Property Taxes in Fort Worth?

Even if you’re not paying inheritance tax, you’ll still be responsible for annual property taxes while the home is in your name.

In Tarrant County, average property tax rates are about 2.3% of assessed value — meaning a $300,000 home costs roughly $6,900 per year in taxes.

Until the house is sold, you’ll need to keep paying these to avoid liens or penalties. Most cash buyers can prorate or handle back taxes during closing.

Common Tax Mistakes Fort Worth Heirs Make

Using the wrong cost basis (using the original purchase price instead of the stepped-up value).
Failing to document FMV properly.
Overlooking deductible selling expenses.
Holding the home too long while it appreciates, increasing taxable gain.
Not paying property taxes during probate, which can lead to liens.

Avoid these pitfalls by working with a qualified tax professional or estate advisor before selling.

Example Scenario:

Jessica inherits her parents’ home in Fort Worth’s Wedgwood neighborhood in early 2024. The appraised value at the time was $285,000.

She sells the property six months later for $290,000.

Step-up in basis = $285,000
Sale price = $290,000
Taxable gain = $5,000

Since Jessica sold within a short time, her taxable amount is minimal — and after closing costs, she owes no capital gains tax at all.

What If Multiple Heirs Are Involved?

If you share the property with siblings or relatives, each heir’s portion of the proceeds — and taxes — is based on their ownership percentage.

Example: Three heirs split a $300,000 home equally. Each person reports their one-third share of any capital gains on their tax return.

If you decide to sell quickly for cash, proceeds can be distributed evenly at closing, simplifying the process for everyone.

Selling the Inherited House As-Is for Cash

If you’re concerned about taxes, repairs, or waiting months for a buyer, you can sell your inherited Fort Worth property as-is to a local cash buyer.

A cash sale offers:

No repairs, cleaning, or showings
No realtor commissions or hidden fees
Fast closings — usually within 7–14 days
Immediate funds for settling any tax or estate obligations

This can also prevent the property from appreciating further — keeping your taxable gain low.

Frequently Asked Questions

Do I pay income tax on the sale of an inherited house?
No — inherited property sales are taxed as capital gains, not ordinary income.

How is fair market value determined?
Through an appraisal or market analysis based on the property’s condition and comparable Fort Worth sales.

Can I deduct repairs or realtor fees?
Yes — legitimate selling costs reduce your taxable profit.

Is there a time limit for selling after inheritance?
No, but the longer you hold it, the more likely it increases in value — and taxable gain.

Do I have to report the sale to the IRS?
Yes, typically on Schedule D of your federal return, using Form 8949 to detail the sale.

Final Thoughts

Selling an inherited property in Fort Worth doesn’t have to be complicated — and it certainly doesn’t have to mean losing money to taxes. Thanks to Texas’s no inheritance tax and the IRS step-up in basis rule, most heirs pay little or nothing when they sell. The key is understanding how these rules work and selling at the right time to minimize your taxable gains.

If you’re managing an inherited home and want a fast, straightforward sale without worrying about repairs or commissions, Gremmax Home Buyers can help. We buy inherited houses in Fort Worth and surrounding areas in any condition — handling all closing costs, paperwork, and details so you can move on quickly and confidently.

Sell your inherited property with ease, clarity, and peace of mind.