Inheriting a house in Orlando can be both a blessing and a challenge. On one hand, you’ve received a valuable asset — potentially one filled with family memories. On the other hand, it often comes with complex financial and legal responsibilities, especially when you decide to sell.
One of the biggest questions people have after inheriting real estate is: “What are the tax consequences when I sell this house?”
The truth is, the IRS and Florida tax laws treat inherited property differently from other types of real estate sales. Whether you plan to sell fast for cash or take time to renovate before listing, understanding your tax obligations can save you thousands — and prevent unpleasant surprises at tax time.
Let’s explore what you need to know about the tax consequences of selling an inherited house in Orlando, and how you can make informed choices that protect your finances and peace of mind.
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Step 1: Understanding the Stepped-Up Basis
When you inherit property, the IRS allows what’s called a “stepped-up basis.” This means the property’s taxable value is “stepped up” to its fair market value (FMV) at the time the original owner passed away — not when they originally purchased it.
Here’s an example:
Let’s say your parents bought a home in Orlando for $100,000 back in the 1980s. Today, that home is worth $400,000. Normally, if they sold it before passing, they’d owe capital gains tax on the $300,000 difference. But since you inherited the home, your “starting point” for taxes becomes $400,000 — the fair market value at the time of inheritance.
If you sell the home soon after inheriting it for around that amount, you might owe little to no capital gains tax. However, if you hold onto the property and its value increases before selling, that increase becomes taxable.
💡 Pro Tip: Get a professional appraisal of the property’s value at the time of death. This establishes a clear record of the stepped-up basis for future tax calculations.
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Step 2: Capital Gains Tax When Selling an Inherited House
If you decide to sell the home, your capital gains tax depends on the difference between the sale price and the stepped-up value.
For example:
- The property’s stepped-up value: $400,000
- You sell it later for: $420,000
- Your capital gain: $20,000
You’d only pay taxes on that $20,000 profit, not the entire amount since the original purchase.
Long-Term vs. Short-Term Capital Gains
Regardless of how soon you sell, inherited property is always considered a long-term capital asset. This is good news because long-term capital gains are taxed at lower rates than short-term ones.
As of 2025, federal long-term capital gains rates are:
- 0% for lower-income taxpayers
- 15% for most middle-income taxpayers
- 20% for higher-income taxpayers
Florida, on the other hand, has no state income tax, which means you won’t owe state-level capital gains tax on your sale — a major advantage for Orlando property owners.
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Step 3: Deductible Expenses When Selling an Inherited House
Many people don’t realize that you can deduct certain expenses related to the sale of an inherited home, reducing your taxable gain. These may include:
- Real estate agent commissions
- Title and escrow fees
- Legal and probate expenses
- Repairs and improvements made before the sale
- Property taxes paid during your ownership
For instance, if you sell an inherited home for $420,000 but spend $15,000 on necessary repairs and $25,000 in commissions and closing costs, you could reduce your taxable gain by $40,000 — potentially eliminating your tax liability.
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Step 4: The Role of Probate in Orlando
Before you can sell an inherited home in Orlando, you may need to go through probate — the legal process of transferring property ownership from the deceased to their heirs.
In Florida, probate can take anywhere from three months to over a year, depending on the complexity of the estate and whether there’s a valid will. During this time, the property remains part of the estate, and any income, expenses, or sale proceeds are managed by the estate’s representative.
Once the probate process is complete and you receive legal title, you can move forward with selling the home.
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Step 5: Special Situations That Affect Your Taxes
Every inheritance situation is unique. Here are a few scenarios that may impact your tax responsibilities when selling a home in Orlando:
1. Multiple Heirs
If several siblings inherit the home, your tax burden is based on your ownership share. For example, if you and your sister each inherit 50%, you each report 50% of the gain or loss on your taxes.
2. Renting Before Selling
If you rent out the property before selling, you may be able to deduct depreciation — but those deductions could later increase your taxable gain when you sell. Consult a tax advisor before turning the home into a rental.
3. Selling Below Market Value
If you sell the home to a family member or friend for less than its market value, the IRS may treat the difference as a gift, which could trigger gift tax reporting requirements.
4. Home Was Your Primary Residence
If you move into the inherited home and live there for at least two years, you might qualify for the home sale tax exclusion — up to $250,000 for single filers or $500,000 for married couples.
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Step 6: Selling Fast for Cash — A Tax-Efficient Option
Many heirs prefer to sell their inherited Orlando home quickly for cash, especially if they want to avoid the ongoing costs of maintenance, insurance, and taxes.
Selling to a cash home buyer or real estate investor offers several benefits:
- No repairs or cleaning needed
- No real estate commissions or closing delays
- Quick closing — sometimes in as little as 7 days
While you’ll still need to consider capital gains tax if the sale price exceeds the stepped-up basis, this option eliminates many ongoing costs and complications.
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Final Thoughts
Selling an inherited house in Orlando doesn’t have to be confusing — but understanding your tax consequences is key to avoiding expensive mistakes.
To recap:
- Use the stepped-up basis to minimize capital gains.
- Keep detailed records of appraisals and sale expenses.
- Understand how probate and ownership affect your taxes.
- Explore selling fast for cash if you want to simplify the process.
- Always seek advice from a tax or legal professional familiar with Florida property laws.
By planning carefully, you can protect your inheritance, save on taxes, and move forward with confidence — all while honoring your loved one’s legacy.
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