Is There a Time Limit on Selling Inherited Property?

What is Considered an Inherited Property?

Inherited properties are assets passed down to beneficiaries after a person dies. It can be acquired in two ways.

The first is through a will, in which the deceased specifies the heirs. The second is through intestacy, which occurs when there is no will, and state laws determine how the assets are distributed.

Inherited property refers not only to real estate but also to cars, money, and other personal possessions.

Probate Process

The probate process is a legal procedure that ensures a deceased person’s assets are distributed correctly. During the process, you must also pay for expenses such as outstanding mortgages, property taxes, utility bills, and other costs. 

Most inherited properties must go through probate court, except for transfer-on-death deeds and houses inherited through a trust. With transfer-on-death deeds, ownership transfers immediately to the beneficiary the deceased chose without probate. 

If the deceased person had a trust agreement stating you would inherit the house upon their death, it usually passes directly to you without the need for probate. 

Time Limits on Selling Inherited Property

In the U.S., there is generally no legal deadline for selling an inherited property, so beneficiaries typically have time to consider their options. 

However, while there is no time limit on selling, family members may be pushed to sell sooner because of their financial needs or sell during a strong market to get a better price. Emotional readiness is another factor, as properties often have sentimental value. All inheritors must agree on the sale, and it’s possible that they won’t all be ready at the same time. 

Taxes on a Property Sale

Tax implications of selling properties vary by state, but they usually include estate taxes, capital gains tax (CGT), and transfer taxes.  

Estate Tax

Estate taxes are taxes on the value of a person’s assets after they pass away. The federal estate tax currently only applies to properties over $13,610,000 (in 2024) or $13,990,000 (2025). [1] The value used is the fair market value of the home, not how much the owner paid for it. 

Unlike some other states, Texas does not have an estate or inheritance tax, so you only have to worry about federal taxes. 

If your property’s value exceeds the limit for the current year, you need to file the tax before the deadline. The federal estate tax return (Form 706) is typically due nine months after the person’s death, though you can sometimes request an extension.

Capital Gains Tax

You only pay capital gains tax when you sell inherited property for a profit. The property value, in this case, is calculated on a stepped-up basis. Instead of using the original purchase price, the property’s value is “stepped up” to its fair market value at the time of the last owner’s death.

Tax law treats inherited property as a long-term capital asset, typically resulting in lower tax rates when sold. Capital gains tax liability on these sales ranges from 0% to 20%, depending on your taxable income.

Tax Benefits

Selling inherited property within a certain timeframe, like within a year of the owner’s death, allows you to sell at a price close to the stepped-up basis value and minimize capital gains taxes. This timing helps secure a fair price while limiting potential property appreciation that could increase your tax obligations.

If you’re planning on selling, contact a tax professional to find ways to save money. 

Probate and Estate Administration

Probate is one small part of the entire estate administration process, which includes managing all assets that belonged to a deceased person according to their wishes and the law. This section will explain more about how the process works, the executor’s role, and cases where you need court approval to sell.

Probate Process Timelines

In Texas, probate typically lasts between three and six months. However, the process can be finished in as little as one month or take up to two years if there are disputes among heirs or other issues.

While you can sell during the probate, it usually lasts longer than a traditional sale, as the transfer of ownership must be completed first. The court may allow the sale during the process and hold the proceeds until the process is finished. 

Executor’s Responsibilities

The executor is usually a friend or family member whom the deceased entrusted to manage their estate. However, the executor can also be a real estate attorney or financial advisor. 

This person is responsible for managing and selling the inherited property, which may include:

• Settling debts
• Paying taxes
• Distributing the remaining assets
• Listing and negotiating the property’s sale

If inheritors contest the decision to sell, the executor may need the court’s approval. 

Court Approval

In some instances, inheritors must have the court’s approval to sell the property. These are cases when:

• The will specifies certain conditions
• There are disagreements among heirs
• The property is a part of a trust
• Some debts need to be paid, and there isn’t enough money to do so without the sale.

Options for Selling Inherited Property

If you inherit property and need to sell it sooner and with less trouble, you have several options. They include a traditional sale, an auction, and a cash home buyer — which is usually the simplest option as there are no repairs needed, no listings, no staging, and no real estate agents. 

Traditional Sale

The traditional selling process includes listing the property with a real estate agent. They will determine its value, help you set a selling price, market it, and show it to potential buyers. This step includes professional photography, staging, and presenting the home, which can be stressful and expensive. 

After you receive an offer, your agent negotiates with the buyer to secure favorable terms. You can then review and decide whether to accept.

The process usually involves mortgage approvals, and it can take months or weeks, depending on market conditions. Finally, you pay the real estate agent a percentage of the sale price, usually between 6% and 10%. 

Selling as-is to a Cash Home Buyer

Selling to cash home buyers like A-List Properties has several benefits over selling on the open market. You don’t have to repair, stage, or even clean the property, as A-List Properties accepts homes in any condition. 

The sale process is faster, as you don’t have to wait for mortgage approval, deal with real estate agents, or go through multiple showings. Our company can close real estate transactions within weeks or even days. 

For a free quote, call (972) 526-7042 or fill out our contact form.

Auction

If you decide to sell an inherited property through an auction, you can do it quickly. However, auctions can result in lower prices than expected, and auction fees tend to cut into your profits significantly. 

FAQs

What Is the Holding Period for the Sale of Inherited Property?

The holding period for the sale of inherited property begins on the date of the previous owner’s death. However, any inherited property is automatically considered a long-term asset, so you don’t have to worry about expensive short-term gain tax rates. So, unlike pre-owned properties, the short-term holding period rules do not apply. 

How to Avoid Capital Gains Tax When Selling Inherited Property?

You cannot fully avoid CGT when selling an inherited property. However, you can minimize it through a step-up in basis, which adjusts the property’s value to its market value at the time of the previous owner’s death.

You can also use strategies such as tax-loss harvesting (offsetting gains with losses from other investments), using it as a primary residence for two years, renting it out to tenants, or deducting closing costs from its sale.

Do I Have to Report the Sale of an Inherited Home to the IRS?

The answer is usually yes. If you sell the inherited property for a gain, you must report it as income on your federal income tax return as a beneficiary. However, the IRS will use a step-up basis to determine its value, which can reduce your overall tax liability.

What Happens When You Inherit a House From Your Parents?

Children who inherit a house from their parents can decide to keep it, rent it, or sell it. However, they must first go through the process of transferring ownership in probate court, resolve any disputes if there are multiple inheritors, and settle any debts tied to the property. They should also consider tax implications if they choose to sell it. 

References: [1] IRS