Montco Selling an inherited house in Pennsylvania
When you inherit a house, your tax basis is generally its value on the date of death, so selling soon after usually produces little or no taxable gain. Any gain is automatically long-term for federal tax (26 U.S.C. §1014, §1223(9)), and Pennsylvania taxes it as a net gain using the date-of-death value.
First: is the estate still open?
If the estate is still being administered, the sale is usually made by the executor or administrator, not by the heirs directly. See selling a house during probate in PA. This page covers what happens for the heirs: taxes, disagreements and options.
Federal tax: the stepped-up basis
- Basis is generally the house's fair market value on the date of death, or the alternate valuation date if the estate chose one (26 U.S.C. §1014(a)).
- Gain is the sale price minus selling costs minus that basis. If you sell for about what it was worth at death, the gain is small.
- Holding period is treated as more than 1 year, so any gain is long-term even if you sell right away (§1223(9)).
- One exception: no step-up if the person who died received the house as a gift within 1 year before death and it passes back to the giver (§1014(e)).
A recent appraisal close to the date of death is the usual way to document the basis.
Pennsylvania tax on the sale
Pennsylvania taxes the gain as "net gains" income, using the fair market value at the date of death as your basis. Two differences from federal rules:
- Pennsylvania doesn't use the federal 6-month alternate valuation date.
- There is no Pennsylvania step-up for property you received as a surviving joint tenant with right of survivorship.
Pennsylvania inheritance tax is a separate tax on the transfer itself, with rates from 0% to 15% depending on your relationship. It's covered on the probate page.
When heirs don't agree
If co-owning heirs can't agree whether or how to sell, any co-owner can file a partition action in the Court of Common Pleas, asking the court to divide the property or order it sold and the money split (Pa.R.C.P. 1551–1574). It's slow and costly, so most families try to agree first, often with each side's attorney involved.
Your options with an inherited house
| Option | Worth considering when |
|---|---|
| List it with an agent | The house is in fair shape and the heirs can wait a few months |
| Sell as-is | It needs work, a cleanout, or heirs live far away |
| One heir buys the others out | Someone wants to keep it and can finance the buyout |
| Rent it out | The heirs want to keep it and someone will manage it |
Common questions
Do I pay capital gains tax when I sell an inherited house?
Only on gain above your basis, which is generally the house's value on the date of death (26 U.S.C. §1014). Selling soon after death often means little or no gain. Ask a tax professional about your numbers.
Is the gain short-term if I sell right after inheriting?
No. For federal tax, inherited property is treated as held more than 1 year, so the gain is long-term (26 U.S.C. §1223(9)).
Does Pennsylvania tax the sale of an inherited house?
Pennsylvania taxes any gain as net gains income, using the date-of-death value as basis. It doesn't allow the federal alternate valuation date.
What if my siblings and I disagree about selling?
Any co-owner can ask the Court of Common Pleas to partition the property, which can end in a court-ordered sale (Pa.R.C.P. 1551–1574). Most families try to agree first.
Sources: 26 U.S.C. §1014; 26 U.S.C. §1223; PA Personal Income Tax Guide, net gains; Pa.R.C.P. 1551–1574 (partition). Checked November 15, 2026.