Selling an Inherited House? Here's What You Need to Know About Taxes

So you just inherited a house and you're wondering — am I going to get hit with a big tax bill? You're not alone. This is one of the most common questions we hear from homeowners in Metro Detroit. Let's break it down in plain English.

The IRS Actually Has Good News For You

Most people assume inheriting a house means a massive tax bill. The reality is the opposite. The IRS has a rule called the step-up in basis that resets your cost basis to whatever the home was worth when you inherited it — not what the original owner paid decades ago.

That means if you sell the home close to its inherited value, you could owe nothing in capital gains taxes.

When Would You Owe Taxes?

You'd only owe capital gains tax if the home increased in value after you inherited it. And even then, the tax only applies to that increase — not the full sale price.

Quick example:

• You inherit a home worth $180,000

• You sell it 8 months later for $195,000

• You owe capital gains on $15,000 only

That's a much smaller bill than most people fear.

Does Michigan Charge Inheritance Tax?

Nope. Michigan has no state inheritance tax and no estate tax. You're only dealing with the federal level, which already favors heirs thanks to the step-up in basis.

Bottom Line

Taxes on an inherited house are rarely as bad as people think. The step-up in basis does most of the heavy lifting for you. The smartest move is to talk to a tax professional and then decide whether to sell or hold.

If you want to sell fast and skip the hassle, Real Time Home Buyers Metro Detroit buys inherited homes as-is for cash. No repairs, no commissions, no stress.

📞 Call or text: 248-509-5398

Real Time Home Buyers Metro Detroit is here to make the process as simple as possible for you.

📞 248-509-5398 — Get your free cash offer today.

This is for informational purposes only. Consult a tax professional for advice specific to your situation.