Last updated September 27, 2026
Stepped-Up Basis on an Inherited House in Florida: What It Means When You Sell
Short answer: When you inherit a house in Florida, your income-tax basis resets to the property's fair market value on the date of death under section 1014(a) of the Internal Revenue Code. You are not taxed on the appreciation that built up during the owner's lifetime; you are taxed only on any gain above the date-of-death value when you sell, and inherited property is automatically treated as held long-term (section 1223(9)). Florida adds no estate, inheritance or income tax of its own. The one number the whole calculation depends on is the date-of-death value, which is why the estate's accountant asks for it early.
Key takeaways
- Basis = fair market value at the date of death (or the alternate valuation date if the estate elects it under section 2032), not the decedent's purchase price.
- Gain on sale = net sale price minus that stepped-up basis; a sale within months of death for close to that value produces little or no taxable gain, and often a deductible loss after selling costs.
- A surviving spouse who co-owned the home gets a step-up on the decedent's half only (section 2040(b), IRS Publication 551); Florida is not a community property state.
- Property in a revocable trust, under a life estate, or under a Lady Bird deed still steps up because it is in the gross estate; a lifetime gift of the house does not.
- The date-of-death value must be documented, by a licensed appraiser's retrospective appraisal or a broker's written date-of-death market analysis; ask the accountant which before ordering.
Informational purposes only. This is not legal or tax advice and no professional relationship is created by reading it. PBP Real Estate, LLC is a licensed Florida real estate brokerage (License CQ1064615), not a law firm, an accounting firm or an appraisal firm. Every figure below is an illustration of the statutory rule; your own numbers belong with your CPA or tax attorney.
What does "stepped-up basis" actually mean?
Basis is the figure the tax code measures gain or loss against. For a house you buy, it starts as what you paid plus certain closing costs and improvements. For a house you inherit, section 1014(a) replaces that history with a single number: the fair market value of the property at the date of the decedent's death (or, if the personal representative elects alternate valuation under section 2032 for estate-tax purposes, the value on that alternate date). The heir "steps up" to the market value and the decedent's original cost disappears from the calculation.
The rule is the reason so many South Florida estate sales produce almost no income tax. A parent who bought in Boca Raton, Delray Beach or Hollywood in the 1980s or 1990s may have a basis a fraction of today's value. The heir does not inherit that low basis; the appreciation during the parent's life is never taxed as capital gain.
| Illustration (statutory arithmetic, not a market opinion) | Parent sells during life | Heir sells after inheriting |
|---|---|---|
| Purchase price (basis before death) | $90,000 | Irrelevant |
| Fair market value at date of death | n/a | $700,000 (new basis) |
| Sale price | $700,000 | $700,000 |
| Selling costs (commission, doc stamps, title) | $45,000 | $45,000 |
| Gain or (loss) recognized | $565,000 gain (before any section 121 exclusion the parent may qualify for) | ($45,000) loss |
The figures are round numbers chosen to show the mechanism. They are not a price for any property and no automated estimate is published on this site.
Does Florida add any tax of its own?
No estate tax, no inheritance tax and no personal income tax. Florida's estate tax was tied to a federal credit that no longer exists, so it does not apply to current deaths, and the Florida Constitution prohibits a tax on personal income. What Florida does charge is documentary stamp tax on the deed when the house is sold: under section 201.02(1)(a), Florida Statutes, 70 cents per $100 of consideration, which on a $700,000 sale is $4,900. In Palm Beach and Broward counties the seller customarily pays it at closing. Miami-Dade County levies a discretionary surtax under section 201.031 on some conveyances, but not on a single-family residence, which by that section's own definition includes a condominium unit. Property taxes also change hands at death, because the decedent's homestead exemption and Save Our Homes cap do not transfer to a new owner; the homestead page covers that.
How is gain calculated when the heirs sell?
Gain or loss is the amount realized (sale price less selling expenses) minus adjusted basis (date-of-death value plus any capital improvements the heirs paid for after death). Three points matter for a family selling within the first year or two:
- Holding period. Section 1223(9) treats property acquired from a decedent as held for more than one year, so any gain is long-term even if the heirs close a sale two months after the death.
- Losses are possible. If the house sells for about its date-of-death value, selling costs alone usually create a loss. Whether that loss is deductible depends on whether the heirs used the property personally in the meantime, which is a question for the accountant, not for us.
- Carrying costs are not basis. Insurance, association dues, utilities and lawn service paid while the house waited to sell are generally not added to basis. Roof, air-conditioning or other capital work paid by the heirs generally is.
The practical consequence is that the tax question and the market question are the same question: what was the property worth on the date of death, and what is it worth now? We answer both, in writing, from BeachesMLS closed sales, and we do it before the listing so that the accountant and the family are working from the same figure.
What if the house was owned jointly with a surviving spouse?
Most South Florida married couples hold their home as tenants by the entirety or as joint tenants with right of survivorship. Section 2040(b) treats that as a "qualified joint interest" and includes exactly one-half of the value in the first spouse's gross estate. IRS Publication 551 spells out the basis result for the survivor: keep your own cost basis for your half, and add the date-of-death value of the half you inherited.
| Illustration | Amount |
|---|---|
| Couple's original purchase price | $200,000 |
| Surviving spouse's basis in own half (50% of cost) | $100,000 |
| Date-of-death value of the whole house | $800,000 |
| Stepped-up basis of the inherited half (50% of value) | $400,000 |
| Surviving spouse's total basis after death | $500,000 |
Florida is not a community property state, so the full step-up on both halves that community-property couples receive under section 1014(b)(6) is not available by default. Since July 1, 2021, Florida couples can create a Community Property Trust under sections 736.1501 to 736.1512, Florida Statutes, which treats trust property as community property "for purposes of general law". Whether that produces a full step-up for federal purposes, and whether it is worth the trade-offs, is exactly the kind of planning question for an estate attorney and CPA before a death, not after one.
A surviving spouse who sells the home later may also qualify for the section 121 principal residence exclusion on their own gain; the interaction between the half step-up and the exclusion is again for the accountant.
Does a trust, a life estate or a Lady Bird deed change the answer?
| How the house was held at death | Stepped-up basis? | Why |
|---|---|---|
| Decedent's sole name, passes through probate | Yes | Section 1014(a): acquired from a decedent |
| Revocable living trust | Generally yes | Included in the settlor's gross estate; section 1014(b)(9). See selling a house in a living trust |
| Life estate deed or enhanced life estate (Lady Bird) deed | Generally yes | The retained life interest pulls the property into the gross estate under section 2036; section 1014(b)(9) then applies |
| Outright gift of the house to a child during life | No | Section 1015: donee takes the donor's basis (carryover), plus gift tax paid on appreciation, if any |
| Joint tenancy with a child added to the deed during life | Partial | Section 2040(a): only the portion attributable to the decedent's contribution is included and stepped up; the child's share carries over |
| Irrevocable trust | Depends | Turns on whether the trust terms cause inclusion in the gross estate; attorney question |
The gift row is the one that surprises families. Adding a child to the deed, or deeding the house outright "to avoid probate", can convert a tax-free step-up into a fully taxable carryover of a 1980s basis. Section 1014(e) also denies a step-up where appreciated property was given to the decedent within one year of death and passes back to the donor. None of this is a reason to change a plan without advice; it is a reason to get the advice.
How is the date-of-death value established?
Publication 551 gives the order of authority: the value reported on the federal estate tax return if one is filed; if none is required, "the appraised value at the date of death". The IRS lists the basic exclusion amount at $15,000,000 for deaths in 2026, so the great majority of South Florida estates file no federal estate tax return and the family must document the value themselves.
| Form of evidence | Who prepares it | When accountants ask for it |
|---|---|---|
| Retrospective appraisal as of the date of death | State-certified or licensed appraiser | Large estates, contested families, or when the CPA wants the strongest file |
| Written date-of-death market analysis from closed sales before the death | Licensed real estate broker | Routine estates where the house is about to be listed and the CPA wants a documented, reasoned figure |
| Tax assessor's just value | County property appraiser | Rarely accepted alone; assessed values lag the market and carry statutory caps |
| Online automated estimate | Software | Not evidence of value on a fixed past date |
Our date-of-death analysis treats the day of death as "today": it uses comparable closings from the six to twelve months before that date, never sales that happened afterward merely because they are now available, and it states the effective date on its face. The date-of-death home value article explains how the figure is built and how it differs from what the house will sell for now. We do not appraise; if the accountant wants a licensed appraiser's report, we say so and can suggest appraisers who do retrospective work in Palm Beach and Broward.
Who reports the sale: the estate or the heirs?
If the personal representative sells during administration (see the personal representative's guide to selling), the estate takes the stepped-up basis and reports the result on Form 1041. If the property is distributed first and the heirs sell as owners, each heir reports their share on their own return. The two routes have different consequences for how a loss can be used and how the proceeds move, and a well-run estate decides this with the attorney and accountant before the listing goes live rather than at the closing table. When the property is protected homestead, the personal representative does not sell it at all; the homestead page explains why.
What should the family gather before the accountant asks?
- Date of death and a copy of the death certificate.
- The deed showing how title was held (sole name, entireties, joint tenancy, trust, life estate).
- The date-of-death value document, appraisal or broker analysis, dated and signed.
- Receipts for any capital improvements paid after death.
- The closing statement from the sale, showing commissions, documentary stamps and title charges.
- If an estate tax return was filed, the Schedule A the executor sent to beneficiaries.
Where we fit
We are not accountants and we do not prepare returns. What we do is the property: a written date-of-death opinion of value prepared by hand from BeachesMLS closed sales, a current opinion of value for the listing decision, and a sale run so that the closing statement the accountant needs is clean. Where a family is weighing an investor's cash offer against a listed sale, the after-tax picture is usually the same either way because of the step-up; the difference is the price, and the probate house buyers page shows what that difference has been.
Related
- Probate real estate in South Florida — the full guide for executors and personal representatives
- Date-of-death home value for the inventory and the accountant
- Can the personal representative sell the house without a court order?
- Homestead property in a Florida probate
- Selling a house held in a living trust
- When heirs disagree about selling an inherited house
- Selling an inherited condominium in Florida
- Selling an inherited house in Palm Beach County
Get the date-of-death figure in writing
The step-up is only as good as the number behind it. Gia Freer, our Broker of Record, prepares a written date-of-death opinion of value, and a current one for the sale, from our own BeachesMLS data. No automated estimate is published on this site and no price here is produced by software.
Stepped-up basis: questions and answers
What is the stepped-up basis on an inherited house?
Under section 1014(a) of the Internal Revenue Code, the income-tax basis of property acquired from a decedent is generally its fair market value on the date of death, not what the decedent paid for it. If a parent bought a Boca Raton house for $90,000 in 1985 and it was worth $700,000 when they died, the heir's basis is $700,000. A later sale is measured against that figure, so the decades of appreciation during the parent's life are not taxed as the heir's gain.
Does Florida tax the inheritance or the sale?
Florida has no state estate tax, no inheritance tax and no personal income tax, so there is no state-level tax on the inheritance itself or on an heir's capital gain. The federal rules still apply. Florida does charge documentary stamp tax on the deed when the house is sold: 70 cents per $100 of consideration under section 201.02(1)(a), Florida Statutes, paid at closing and customarily paid by the seller in most of the state.
Do I pay capital gains tax if I sell the inherited house right away?
Usually very little. Gain is the sale price less selling costs less the stepped-up basis. If the house sells within months of death for close to its date-of-death value, the gain is small or there is a loss once commissions and closing costs are subtracted. Section 1223(9) also treats inherited property as held for more than one year, so any gain is long-term regardless of how quickly the heir sells.
What happens to the basis when one spouse dies and the other keeps the house?
For a home held by a married couple as tenants by the entirety or as joint tenants with right of survivorship, section 2040(b) includes one-half of the value in the deceased spouse's gross estate. IRS Publication 551 explains the result: the surviving spouse's basis is their own cost for their half plus the date-of-death value of the half they inherited. Only half of the house steps up. Florida is not a community property state, so the full double step-up available to community property does not apply unless the couple used a Florida Community Property Trust under sections 736.1501 to 736.1512.
Does a house in a revocable living trust still get a stepped-up basis?
Generally yes. Property in a revocable trust is included in the settlor's gross estate and section 1014(b)(9) gives property that is includible in the gross estate a date-of-death basis. The same logic applies to a home kept under a life estate or an enhanced life estate (Lady Bird) deed, because the retained interest brings the property into the gross estate. A gift of the house during life is different: the child takes the parent's original basis under section 1015 and loses the step-up entirely.
Who decides what the date-of-death value was?
The estate's accountant or the heir, when the return is prepared, using evidence of fair market value on that date. Publication 551 says the basis can be established from the value reported on the estate tax return, or where none is required, from the appraised value at the date of death. In practice that means either a retrospective appraisal by a licensed appraiser or a broker's written date-of-death market analysis built from sales that closed in the months before the death. Ask the accountant which form they want before ordering either.
What if the estate sells the house instead of the heirs?
The estate itself takes the stepped-up basis and reports the sale on its own fiduciary income tax return (Form 1041). Selling costs are deducted the same way. Whether the estate or the heirs should be the seller is a decision for the estate's attorney and accountant together, because it affects who reports the gain or loss and how any loss can be used.
Do I have to file a federal estate tax return for the house to get the step-up?
No. The step-up under section 1014 applies whether or not an estate tax return is due. The federal estate tax only reaches estates above the basic exclusion amount, which the IRS lists at $15,000,000 for deaths in 2026, so most South Florida estates file nothing at the federal level. Very large estates that do file are subject to consistent-basis reporting, where the value on the estate tax return fixes the heirs' basis.
Sources and legal references
This page summarizes Florida law and court procedure for property owners. The primary sources are below; for your own estate, rely on a Florida-licensed probate attorney.
- 26 U.S.C. § 1014, Basis of property acquired from a decedent — Legal Information Institute, Cornell Law School
- 26 U.S.C. § 1223(9), Holding period of property acquired from a decedent — Legal Information Institute, Cornell Law School
- IRS Publication 551, Basis of Assets (Inherited Property; Qualified Joint Interest) — Internal Revenue Service
- IRS: Estate Tax (basic exclusion amounts by year) — Internal Revenue Service
- Fla. Stat. 201.02, Tax on deeds (documentary stamp tax) — Florida Legislature
- Chapter 732, Florida Statutes: Probate Code; Intestate Succession and Wills — Florida Legislature (Online Sunshine)
- Chapter 733, Florida Statutes: Probate Code; Administration of Estates — Florida Legislature (Online Sunshine)
- Section 733.613, Florida Statutes: Personal representative's right to sell real property — Florida Legislature (Online Sunshine)
- Section 735.201, Florida Statutes: Summary administration; nature of proceedings — Florida Legislature (Online Sunshine)
- Section 732.401, Florida Statutes: Descent of homestead — Florida Legislature (Online Sunshine)
- Section 733.702, Florida Statutes: Limitations on presentation of claims — Florida Legislature (Online Sunshine)
- Florida Probate Rules (Florida Rules of Court Procedure) — The Florida Bar
- Publication 559, Survivors, Executors, and Administrators — Internal Revenue Service
- Property tax exemptions, including homestead — Florida Department of Revenue
Families we have helped through an estate sale
PBP Real Estate holds 86 Google reviews at an average of 5.0 out of 5. Every quote below is a verbatim excerpt from a public review on that profile, shortened only where marked.
Gia and John from PBP Real Estate exceeded expectations in selling my mother's Delray Beach condo, which had previously failed to sell with another firm. Despite being in New York, I experienced excellent communication and responsiveness via phone, text, and email, making the remote process, including the closing, stress-free.
★★★★★ Robert S. · Google review, December 2024
I needed to sell my mothers home from out of state and Gia made the whole process very easy. She helped me getting the right people to get the house emptied and cleaned.
★★★★★ Roger D. · Google review, December 2024
We live in Ohio and had to sell a home in South Florida that needed a lot of work. She is extremely knowledgable and very helpful when it came to what should be done and what could be left alone to get us the most profit. Gia has a large network of reliable contractors.
★★★★★ A Google reviewer · Google review, April 2020
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