I Inherited a House Worth $400,000. An Appraisal Could Save Roughly $7,500 in Capital Gains Tax.

Inheriting a house can give you a step-up in basis, potentially reducing capital gains tax when you sell it. To support that tax treatment, you generally need documentation showing what the home was worth when the previous owner died. On a $400,000 home, a timely appraisal could save you $7,500 in federal capital gains tax.

Why the First 30 Days Matter for Your Tax Basis

Inherited real estate generally receives a new basis equal to its fair market value when the owner dies, although different rules apply in some situations.

Getting an appraisal soon after you inherit the home gives you a record of what the property was worth at that time. The IRS does not require an appraisal within 30 days, but acting early makes it easier to find comparable sales and document the property’s condition.

Records become especially important when selling. Your basis determines the capital gain, so you’ll need documentation to support it. And the longer you wait, the harder it can be to establish the home’s date-of-death value. This table shows how waiting could affect a valuation:

That delay is something heirs might want to avoid. In a 2026 Inherited Property Match survey of 1,350 U.S. adults involved in selling inherited real estate, 36% said they wished they had gotten a property valuation sooner when selling. ¹ A financial advisor could help you identify records that may be useful for documenting the tax basis of an inherited home.

How an Early Appraisal Could Help Save Tax Money

To show how getting an appraisal early may help you reduce capital gains taxes, let’s break down an example of an inherited house with a $400,000 sale price. The previous owner paid $150,000, but the step-up in basis generally resets the home’s basis to its date-of-death value.

If that value is $400,000 and you later sell the home for the same amount, you would have no capital gain. But if the date-of-death value were $350,000, the same $400,000 sale would create a $50,000 gain.

A gain on inherited property is generally treated as a long-term capital gain, regardless of how much time you own it. ² In 2026, individuals do not owe long-term capital gains on taxable income up to $49,450. The 15% rate applies to amounts between $49,450 and $545,500, while gains above that level get taxed at 20%. ³

If you have other taxable income, it will affect how much tax you owe on the $50,000 gain. Here are three examples:

With no other taxable income, you would owe just $82.50 because most of the $50,000 falls within the 0% bracket. At $100,000, the tax goes up to $7,500. At $500,000, part of the gain reaches the 20% bracket, bringing the bill to $7,725.

These examples do not include other federal taxes, such as the net investment income tax, or state taxes that may apply.

Two Ways to Protect Your Tax Basis

Once you established the home’s date-of-death value, keep the appraisal along with records showing the property’s condition and comparable sales. This documentation can help support your basis when you eventually sell the home.

You should also keep receipts for qualifying capital improvements, such as a new roof or major renovation. These costs may increase your adjusted basis and reduce the taxable gain when you sell.

A financial advisor can help time the sale of an inherited home with the goal of reduceing capital gains tax.

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