Inheriting a house can be both a blessing and an emotional challenge. On one hand, you’ve received a valuable asset that could improve your financial situation. On the other hand, you’re also processing the loss of a loved one. If you’re unsure what to do next, understanding the tax consequences of selling an inherited house in Ohio can help guide your decision.
The good news? In most cases, the tax impact of selling inherited property in Ohio isn’t as burdensome as you might expect. U.S. tax laws generally ease the financial burden on individuals who inherit real estate—especially when it comes to capital gains.
Understanding the Tax Basis of an Inherited Property in Ohio
The “basis” of a property is the starting point used to calculate capital gains tax. When someone inherits a home in Ohio, the basis is typically stepped up to the market value at the time of the original owner’s death.
Example:
Let’s say your loved one bought a home in Ohio 25 years ago for $30,000. At the time of their passing, the property was worth $120,000. For tax purposes, your new basis is $120,000. If you later sell the house for $130,000, you would only owe capital gains tax on the $10,000 profit—not on the entire $100,000 increase in value over the decades.
Capital Gains Tax on Inherited Property in Ohio
When you sell an inherited house in Ohio, the IRS treats it as a capital gain or capital loss transaction—even if you sell it right away.
Here’s what you need to know:
- Inherited properties are always treated as long-term assets, no matter how long you’ve owned them.
- This means you qualify for the lower long-term capital gains tax rates, even if you sell the property soon after inheriting it.
- You’ll need to calculate your capital gain by subtracting the property’s stepped-up basis from the final sale price.
How to Report the Sale of an Inherited House
Selling inherited property in Ohio means you must report the transaction on your income tax return.
Steps to follow:
- Determine the adjusted basis (market value at the date of death).
- Subtract that basis from your sale price to calculate capital gain or loss.
- Report the gain/loss on Schedule D of your federal tax return.
You should also keep documentation of the appraised value at the time of inheritance, as well as closing documents from the sale.
Ohio Probate and Selling an Inherited Property
Before selling the inherited house, you’ll likely need to go through probate in Ohio, unless the property was placed in a trust or had a transfer-on-death deed.
Here’s how that works:
- The probate court in Ohio will need to authorize the sale if the property was solely in the deceased’s name.
- If multiple heirs are involved, all parties must agree to the sale before proceeding.
- You may need to file a petition with the court for permission to sell the property.
This process can take some time, so it’s important to plan ahead.
Selling to an Investor Can Simplify the Process
If you’re overwhelmed with the process or want to sell quickly, selling your inherited house to a real estate investor in Ohio may be a smart option. Here’s why:
- You can sell the house as-is, without making costly repairs or upgrades.
- The closing process is typically fast and straightforward.
- Investors are familiar with probate sales and can help guide you through the process.
Need Help Selling an Inherited House in Ohio?
At Legacy Home Solutoins, we specialize in helping Ohio homeowners navigate the challenges of selling inherited property—especially when dealing with probate, repairs, or taxes.
đź“ž Call us today at 440-973-6024 for expert guidance and a no-obligation offer.