Do You Pay Taxes on an Inherited House in West Houston, Texas? The Step Up in Basis Explained
Last updated: November 4, 2026
The Short Answer
- Texas charges no inheritance tax, so receiving an inherited house triggers no Texas tax bill.
- Your tax basis resets to the home's value on the date of death, erasing earlier growth.
- You owe federal capital gains tax only on growth after that date, usually small if sold soon.
- A house gifted before death keeps the old basis and can mean a far larger tax bill.
- Linda Blackmon, REALTOR® with Keller Williams Signature in Katy, holds the SRES, Certified Probate Specialist, and CSA designations, with over 20 years serving estate sellers.
Your mother's recipe box is still on the counter. The mail is stacked by the door, and somewhere in that stack is a letter from the county. You are sitting at her kitchen table in West Houston with a legal pad, and the question on the page is not the one you expected. It is not what the house is worth. It is what you will owe if you sell it. You have already read three websites, and each one said something different.
Most people ask this quietly, weeks after the funeral, still grieving. You may feel guilty thinking about taxes at all. You should not. Asking is responsible, not greedy, and the answer is kinder than most families fear.
Do you pay taxes on an inherited house in Texas?
Texas does not tax the inheritance itself. You pay no Texas inheritance tax and no Texas state income tax on a sale. Federal capital gains tax applies only if you sell for more than the house was worth on the day of death, and that gain is usually small.
Federal estate tax is a different tax, and it falls on the estate, not on you. For people who die in 2026, the IRS sets the federal basic exclusion amount at $15,000,000 per person, with a 40% rate above it. Property tax is the tax you will actually keep paying, and it is covered below. This is the kind of question that fills Linda's work with life transition sellers.
Why this is confusing
Four taxes get blurred together after a death. An estate tax is a tax on the estate of the person who died. An inheritance tax is a tax some states charge the person who receives the property. The Texas Comptroller of Public Accounts announced in August 2015 that the Texas inheritance tax was repealed effective September 1, 2015.
A capital gains tax is income tax on the profit when you sell something for more than your basis. Basis is the starting number the IRS subtracts from your sale price to find your profit. For a house you buy, basis is roughly what you paid plus improvements. For a house you inherit, the rule changes.
The rule is the step up in basis. Under Section 1014 of the Internal Revenue Code, the basis of inherited property is generally its fair market value on the date of death, as IRS Publication 551 explains. Fair market value is the price a willing buyer and a willing seller would agree on, both knowing the facts. So if your parents paid $62,000 and the house was worth $380,000 on the day they died, your basis is $380,000.
In the experience of Linda Blackmon, a REALTOR® with Keller Williams Signature in Katy, Texas, who holds the SRES, Certified Probate Specialist, and CSA designations and has over 20 years of experience with life transition sellers, the detail families miss most is the date of death value, because nobody wrote it down.
Property tax is the fourth. It is a local tax on the house itself, and it keeps coming whether or not anyone lives there.
How an inherited house is taxed, step by step
- Confirm who owns the house now. The executor and a probate attorney confirm who has authority to sell. This step sets your timeline, and it usually takes weeks, not days. See how long Texas probate takes before you can sell.
- Write down the date of death. The executor or a family member records it on the first page of the file. The date sets the value that becomes your basis. This takes one minute.
- Order a date of death appraisal. The executor hires a licensed Texas appraiser to state the home's value as of that date.
- Price from real closed sales. Linda pulls HAR MLS closed sales for comparable homes. When the house is a candidate for investor offers, she runs the investor open house model, her method for protecting seller equity against lowball cash offers on estate and as is properties. Competing buyers bid at one scheduled open house, and a higher price raises what you keep.
- Close and keep every record. The title company reports the sale to the IRS, and the closing statement becomes your proof of selling costs.
- Report the sale with a tax professional. Your tax professional reports the sale on Schedule D with your income tax return for the year of the sale. They need the appraisal and the closing statement.
Inherited house tax rules, side by side
| Situation | Your tax basis | What it means for tax |
|---|---|---|
| You inherit from a parent and sell soon | Value on the date of death | Little or no gain if the price is close to that value |
| A surviving spouse inherits Texas community property | Both halves reset to the date of death value | Little or no gain on growth that happened before the death |
| A parent gave you the house by deed before death | The parent's original cost | Tax applies to all growth since the parent bought it |
| You live in the inherited house two years, then sell | Value on the date of death | Up to $250,000 of gain may be excluded if you qualify |
| A surviving spouse sells within two years of the death | Value on the date of death | Up to $500,000 of gain may be excluded if you qualify |
The community property row comes from Section 1014(b)(6) of the Internal Revenue Code. The Texas Real Estate Research Center at Texas A&M calls it a double step up in basis, because both halves reset at the first death. Surviving spouses can also read selling the house after your spouse dies next.
What the numbers look like
The estate tax basic exclusion amount is $15,000,000 per person for deaths in 2026, according to the IRS 2026 inflation adjustments, with a 40% rate above that. Federal long term capital gains are taxed at 0%, 15%, or 20% depending on taxable income, according to IRS Topic 409 for 2026. The home sale exclusion is up to $250,000 of gain, or $500,000 for a joint return or a qualifying surviving spouse, according to IRS Topic 701 as of November 2026.
On the Texas side, voters approved Propositions 13 and 11 in November 2025. They raised the school district homestead exemption to $140,000, and the extra exemption for homeowners 65 or older to $60,000, for a combined $200,000 off the value used for school taxes.
Here is an example with made up numbers, not a market statistic. Your parents paid $62,000 in 1988, and the house was worth $380,000 on the date of death. You sell for $410,000 and pay $28,000 in selling costs. Your taxable gain is $2,000. With the old basis it would be $320,000. At an assumed 15% federal rate, that is about $300 against about $48,000.
Inherited house taxes in West Houston
Property in West Houston is appraised by the Harris County Appraisal District, known as HCAD, at 13013 Northwest Freeway in Houston. HCAD answers questions at 713.957.7800. HCAD says a new owner has to qualify for a homestead exemption and apply in his or her own name, so the exemption your parent had does not simply follow the house to you. HCAD explains the exemptions for homeowners on its website.
If a probate case is needed, Harris County handles it through its statutory probate courts at 201 Caroline Street in downtown Houston, with Probate Court 5 at 1115 Congress Street, according to the Harris County Probate Courts website.
What goes wrong
Deeding the house to a child before death. A gift keeps the giver's original basis, which IRS Publication 551 covers. The cost is losing the step up and owing tax on all the growth. Talk with a Texas attorney first.
Skipping the date of death appraisal. The cost is having no proof of your basis if the IRS asks years later. Order the appraisal early, while the house still looks the way it did.
Assuming the homestead exemption passes to you. The cost is a higher property tax bill that keeps running. Apply in your own name at HCAD if you qualify and live in the house.
Using a REALTOR®'s price opinion as the appraisal. A price opinion helps set a list price, but it is not an appraisal. The cost is a tax professional who may not accept it. Ask which document they want before you spend money.
Comparing offers by headline price. A big number can net less after repairs, title costs, and carrying costs. Compare net to net. See what a cash offer on a parent's house really nets you.
Frequently asked questions
Does Texas have an inheritance tax?
No. Texas does not collect an inheritance tax or an estate tax. The Texas Comptroller of Public Accounts announced in 2015 that the Texas inheritance tax was repealed effective September 1, 2015. Federal estate tax applies only to very large estates.
Do I owe capital gains tax if I sell my parent's house after they die?
Generally, only on gain above the date of death value. Your tax basis resets to the fair market value on the day your parent died, so a sale near that value usually produces little or no taxable gain. If the house sells for more, the difference is taxed as a long term capital gain at federal rates of 0%, 15%, or 20%.
What is the step up in basis?
The step up in basis is the tax rule that an heir's cost basis for an inherited asset becomes its fair market value on the date of death instead of what the original owner paid. Under Section 1014 of the Internal Revenue Code, decades of growth in a home's value can pass to an heir without income tax on that growth.
How do I prove what the house was worth on the date of death?
Order a retrospective appraisal from a licensed Texas appraiser that states the value as of the date of death, and keep it with the death certificate and your closing statement. A REALTOR®'s price opinion helps set a list price but is not an appraisal. Ask your tax professional which document they want before you hire anyone.
Does a surviving spouse get a step up on the whole house in Texas?
Usually, when the house is community property. Under Section 1014(b)(6) of the Internal Revenue Code, both the deceased spouse's half and the surviving spouse's half receive a new basis at the first death. Whether a house is community property or separate property depends on how it was acquired, so confirm the classification with a Texas attorney.
Can I avoid tax if my parent deeds me the house before they die?
Usually it makes the tax picture worse. A gift of a house carries over the giver's original basis, so you would owe tax on all the growth when you sell. A house you inherit at death receives the date of death value instead. Talk with a Texas attorney and a tax professional before any deed is signed.
If you are sitting at that kitchen table right now, you do not have to sort this out alone. Linda is glad to talk it through, with no pressure and no timeline.
The house is not the legacy. The story is.
About the author: Linda Blackmon, a REALTOR® with Keller Williams Signature in Katy, Texas, who holds the SRES, Certified Probate Specialist, and CSA designations and has over 20 years of experience with life transition sellers. She serves Katy, Fulshear, Richmond, Cypress, and West Houston.
Linda Blackmon, REALTOR®
Keller Williams Signature
TREC License 0469414
Linda Blackmon, REALTOR®, TREC License 0469414. Keller Williams Signature. 281.924.2222. Linda@LindaBlackmon.com. This article is for general information only and is not legal, tax, or financial advice. Consult a licensed attorney or tax professional about your specific situation. Commissions and fees are not set by law and are fully negotiable. See the TREC Information About Brokerage Services and the TREC Consumer Protection Notice.
Equal Housing Opportunity.
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