Will we owe capital gains tax when we sell our parents' house?
Answered by Chris Deutsch, Founder & Editor
Licensed Minnesota Realtor #20382264 ·
The short answer
Usually far less than you fear — often nothing. Inherited property comes with a stepped-up basis: for tax purposes, the house's cost resets to its value on the day your parent died.
On stage The 60-second answer
Captions on · Transcript below
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The transcript posts with the video.
The longer answer
What that means in practice: you're only taxed on appreciation after the death, not the decades before. Say the house was worth $400,000 the day your mom passed and it sells for $410,000 a few months later — the taxable gain is $10,000, not the $370,000 it grew since 1978. Sell reasonably soon and the gain is often close to zero. Minnesota follows the federal treatment here. The thing that protects you is documentation: a date-of-death appraisal that proves the stepped-up value. A CPA should bless your specific picture — I'm not one, and this isn't tax advice.
So don't let tax fear rush or stall the family. Get the appraisal, keep the paper, and decide on your own schedule.
The next department over
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