Determining the Taxability of Inherited Property Sales
To determine if the sale of inherited property is taxable, you must first establish your basis in the property. The basis of inherited property is generally one of the following:
- Fair Market Value (FMV) on the Date of Death:
The FMV of the property as of the date of the decedent’s death applies, whether or not the executor files an estate tax return (Form 706: United States Estate (and Generation-Skipping Transfer) Tax Return). - Alternate Valuation Date:
The FMV of the property on the alternate valuation date may be used if the executor files Form 706 and elects the alternate valuation. Refer to the Instructions for Form 706.
For information about the FMV on the date of the decedent’s death, contact the executor of the estate.
Additional Considerations
In 2015, Congress passed a law requiring, in certain circumstances, that the recipient’s basis in inherited property aligns with the value of the property as determined for Federal estate tax purposes. For updates on this and other estate tax changes, check the What’s New – Estate and Gift Tax section.
Need Assistance?
If you are in the Dallas-Fort Worth (DFW) area and would like to discuss this with an experienced Dallas Attorney, call us at (469) 626-7760 to schedule a consultation.
