Do you pay taxes when you sell an inherited house in Florida?

Does Florida tax an inheritance or the sale of an inherited house?

No. Florida has no state estate tax for deaths after 2004, no inheritance tax and no personal income tax, so the state does not tax your gain. Federal tax rules still apply, and so do property taxes and doc stamps.

The Florida Department of Revenue says a federal change ended Florida's estate tax for people who died after December 31, 2004. Since July 1, 2023, personal representatives no longer file the old affidavit of no Florida estate tax due, Form DR-312 (Florida DOR). The Florida Constitution also limits state taxes on inheritances and on people's income, and Florida charges neither (Fla. Const. Art. VII, s. 5).

If you live in another state, your own state may tax the gain or the inheritance. Ask a CPA where you live.

Federal estate tax is figured on the whole estate, and the personal representative files the return, Form 706. A return is required only when the gross estate, plus certain lifetime gifts, is over $15,000,000 for deaths in 2026 ($13,990,000 for 2025), or to pass unused exclusion to a surviving spouse (IRS). The IRS says most relatively simple estates do not need to file.

How is capital gains tax figured on an inherited house?

You start from the house's fair market value on the date of death, often called a stepped-up basis. Your gain or loss is what you sell for, minus selling costs, minus that basis, and it is always treated as long-term.

Federal law sets the basis of inherited property at its fair market value on the date of death (26 U.S.C. 1014). If the estate filed an estate tax return and chose the alternate valuation date, that value is used instead. If the estate filed Form 706, you may get a Schedule A (Form 8971) showing the value you must use (IRS Publication 551).

1. Start with the sale price.
2. Subtract selling costs. The IRS counts commissions and state and local transfer taxes, such as Florida doc stamps, as selling expenses (Form 8949 instructions).
3. Subtract your basis: the date-of-death value, plus improvements you made after you inherited it, such as a new roof or central air (Publication 551).
4. What is left is your gain. A negative number is a loss.

Long-term, always. If you inherit property, the IRS treats you as holding it more than 1 year, however long you actually owned it (IRS Publication 544). Long-term gains are taxed at 0, 15 or 20 percent, depending on your taxable income (IRS Topic 409). Some higher-income sellers also owe the 3.8 percent net investment income tax (IRS Topic 559).

If you were the owner's spouse. For a home you owned together, only your late spouse's share gets a new basis. Your own share keeps its old basis (IRS Publication 523).

If it sells at a loss. A sale below the date-of-death value can be a capital loss. A loss on personal-use property, such as your own home, is not deductible (IRS Topic 409), so how the house was used matters.

Keep proof of the date-of-death value, such as an appraisal. The IRS says to ask the estate's executor (in Florida, the personal representative) for that value (IRS).

How do you report the sale on Form 8949 and Schedule D?

Most heirs list the sale in Part II of Form 8949, the long-term part, and carry the totals to Schedule D of Form 1040. The title company usually reports the sale to the IRS on Form 1099-S.

1. The settlement agent, usually the title company, files Form 1099-S, with a separate form for each seller (Form 1099-S instructions).
2. On Form 8949, use Part II and write INHERITED in column (b), where the date you got the property would go.
3. Enter the sale price in column (d) and your basis in column (e). Selling costs not already shown on the 1099-S go in column (g), with code E in column (f).
4. Carry the totals to Schedule D.

The IRS says the gross proceeds from selling inherited property count when you decide whether you must file a return at all (IRS).

When the estate sells. Whether the estate or the heirs report the sale depends on who legally owns the house under state law (IRS Publication 559). If the estate reports it, the personal representative files the estate's income tax return, Form 1041. That return is required when the estate has $600 or more of gross income for the year. A Florida homestead often passes straight to the heirs, as our probate guide explains.

Talk to a CPA before you sell if:

• The estate filed, or must file, a federal estate tax return.
• You owned the house together with the person who died.
• The house was rented out, before or after the death.
• You or your spouse gave the house to the person within 1 year before the death. Then the old basis carries over instead (Publication 551).
• You expect a loss, you live outside Florida, or the estate is the seller.

What happens to property taxes after the owner dies?

They often go up. The homestead exemption usually ends after the year of the death, and a change of ownership ends the Save Our Homes cap, so the house is reassessed at full market value the next January 1. A surviving spouse is the main exception.

A homestead exemption takes up to $50,000 off a home's taxable value, and part of it now rises each year with inflation (Florida DOR, PT-113). Save Our Homes limits yearly increases in a homestead's assessed value to 3 percent or the change in the Consumer Price Index, whichever is less (Florida DOR, PT-112). Over time, the capped value can sit well below market value.

• The exemption. The Department of Revenue says the house will not get the homestead exemption in the year after the owner's death. The exceptions are a surviving spouse, or a joint owner with survivorship rights who already had the exemption and lives there (Florida DOR).
• The cap. After a change of ownership, including a transfer at death, the house is assessed at full market value on the next January 1. The law lists exceptions, such as a transfer to a surviving spouse, to a minor child under the homestead rules, or to a dependent who lives there (Fla. Stat. 193.155).
• After that. A house that is no one's homestead gets a 10 percent yearly cap on assessment increases, but the cap does not apply to school taxes (Fla. Stat. 193.1554).
• If an heir moves in. An heir who makes the house a permanent home by January 1 can apply for their own homestead exemption by March 1 (PT-113).

Who pays doc stamps when you sell an inherited house?

Florida's documentary stamp tax on a deed is 70 cents for each $100 of the price. The law makes every party liable, and the contract decides who pays. By custom, the seller usually pays it.

The rate comes from Fla. Stat. 201.02, and a partial $100 counts as a full $100. On a $300,000 sale, that is 3,000 times 70 cents, or $2,100. The Department of Revenue says all parties to the deed are liable for the tax, whichever one agrees to pay it (Florida DOR). Pinellas, Hillsborough and Pasco all use the 70-cent rate; only Miami-Dade differs.

Doc stamps you pay as the seller are a selling expense, so they lower your taxable gain (step 2 above).

The Department of Revenue lists a personal representative's deed given under a probated will among documents generally not taxed. A sale to a buyer is taxed on the price.

Which offices handle this in Pinellas, Hillsborough and Pasco?

The county property appraiser handles exemptions and reassessment, the tax collector sends the bills, and the clerk records the deed. The details differ a little by county.

Sell now, keep it, rent it or move in: how do the taxes compare?

Selling soon after the death often leaves the smallest taxable gain, because the basis is close to the sale price. Keeping it can make sense too. These are general patterns, not advice.

Our cash offer vs. listing comparison shows what each path could leave you after costs, and how we calculate an offer explains ours.

How does Tao Home Buyers handle the tax side of a sale?

We don't give tax advice. We buy inherited houses as-is for cash in Pinellas, Hillsborough and Pasco, and we close at a licensed title company, which prepares the closing statement you will want for your CPA.

Tao Builders LLC is the end buyer: it buys in its own name and does not assign or wholesale contracts. Earnest money goes to the title company the same day the contract is signed, or the next business morning if it is signed after hours. The seller picks the closing date, and we can close in as few as 10 days when the title is clear, so you can talk with your CPA about timing first.

Our cash offer will usually be below what the house would sell for fully repaired. Matan, the owner, is a licensed Florida real estate sales associate with Jay Alan Real Estate, buying for his own company as a principal, not as anyone's agent.

Sources

Official sources we checked for this page. Rules change, so confirm anything important with the source or a Florida attorney.

1. IRS Publication 551, Basis of Assets: inherited property
2. IRS Publication 559, Survivors, Executors, and Administrators
3. IRS Publication 544, Sales and Other Dispositions of Assets: holding period
4. Instructions for Form 8949 (IRS)
5. Estate tax filing thresholds by year of death (IRS)
6. 26 U.S.C. 1014, basis of property acquired from a decedent (GovInfo)
7. Florida Estate Tax (Florida Department of Revenue)
8. Documentary Stamp Tax (Florida Department of Revenue)
9. What happens to the homestead exemption when the property owner dies? (Florida Department of Revenue)
10. PT-112, Save Our Homes Assessment Limitation and Portability Transfer (Florida Department of Revenue)
11. Fla. Stat. 193.155, homestead assessments and change of ownership (Florida Legislature)
12. Florida Constitution, Art. VII, sec. 5, estate, inheritance and income taxes (Florida Legislature)