Inheriting a house can be both a blessing and a challenge. While a property may provide financial opportunity, it also raises questions about taxes—especially if you plan to sell. At Rebuilder Solutions, LLC, we work with families across the Portland Metro area and nearby communities like Newberg, Sherwood, Dundee, McMinnville, Tigard, and Tualatin to navigate these important decisions.
Here’s what to know about tax responsibilities when selling an inherited home.
1. Understanding “Step-Up in Basis”
When you inherit a house, the IRS generally gives the property a “step-up in basis.”
- Instead of owing taxes on the original purchase price, your cost basis is the home’s fair market value at the date of inheritance.
- If you sell quickly and the sale price is close to that stepped-up value, you may have little or no capital gains tax.
2. Capital Gains Tax on the Sale
If the property appreciates between the time you inherit it and when you sell it, you may owe capital gains tax on the increase.
- Example: If the home’s stepped-up value is $400,000 and you sell for $420,000, the $20,000 difference is generally subject to capital gains tax.
3. Back Property Taxes
Outstanding property taxes stay attached to the property.
- If the previous owner had unpaid property taxes, those taxes must be paid at or before closing.
- The amount will usually be deducted from sale proceeds if not paid earlier.
4. Income Taxes and Other Considerations
You typically do not owe ordinary income tax on the inherited amount itself, but you will report any capital gain. Depending on the situation, estate taxes, inheritance taxes (not in Oregon), or local fees may also apply.
5. Key Takeaway
Selling an inherited home in Oregon does not automatically mean you’ll owe large taxes. Many families pay little or no capital gains tax if they sell promptly at market value. Still, every case is unique, so professional guidance is essential.
Take the Next Step Toward Resolution
If your family is struggling to agree on what to do with an inherited home:
📞 Contact Rebuilder Solutions, LLC at 503-862-3116 for a free, no-obligation property evaluation. Or, for more information, CLICK HERE
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Disclaimer:Rebuilder Solutions, LLC is not a law firm, financial advisor, or tax professional and does not provide legal, financial, or tax advice. The information in this article is for informational purposes only. Homeowners should consult a qualified attorney, financial advisor, or housing counselor for guidance on their specific circumstances.