Tax obligations of estates
Estate taxes, property taxes, and income tax implications for inherited property. Educational articles for personal representatives.
The estate's own tax number, and the order the first year runs in
The tax paperwork of the first year after a death looks like a pile. It is actually a sequence, and almost all of it is driven by two dates: the date of death, and the ordinary filing deadline that follows it.
Selling an inherited home: how the capital gain is actually computed
Families expect a tax bill on the whole sale price, or expect none at all, and both are usually wrong. The computation is short, its inputs are knowable early, and one widely assumed benefit generally does not transfer to an heir.
Stepped-up basis: the number that decides what an inherited house costs in tax
One rule in the Internal Revenue Code does more for families inheriting a home than most of the rest of the tax code combined. It resets the property's tax cost to its value on the date of death, which means decades of appreciation are simply never taxed.
Form 1041: when the estate itself becomes a taxpayer
After a death, income does not stop arriving. The estate is treated as its own taxpayer, with its own tax year, its own identification number and its own return. Here is what triggers that return, what counts as the estate's income, and what emphatically does not.
The final tax return: the last Form 1040 for someone who has died
Death ends a tax year in the middle. One more individual return is generally due for the part of the year the person was alive — filed by someone else, on the ordinary deadline, with a few rules that apply to no other return anyone will ever file.
What you actually owe when you inherit a home, in plain English
Most states levy no inheritance tax, and the federal estate tax exemption is high enough that most families never trigger it. The real tax issue is something else.