Step-Up in Basis: Selling an Inherited Florida House
3 min read · Last updated 2026-08-03 · Reviewed by Camilo Palacio, Licensed Florida Real Estate Professional (License #3280644, REALTOR®)
Step-up in basis means your cost for tax purposes resets to the house's fair market value on the date the person you inherited it from died, not what they originally paid. Sell close to that value and you owe little or no capital gains tax. Cash Flow Deals is one option that locks a net price before repairs get scoped, so you know your number before this tax math even matters.
| Factor | Traditional Listing | Cash Flow Deals |
|---|---|---|
| Timeline | 6 to 12+ months to list, inspect, and close through a traditional mortgage buyer, plus time to sort out basis and any estate paperwork first | Net price locked upfront, closing timed around when the seller is ready, not around a buyer's mortgage underwriting |
| Repairs | Seller typically pays for repairs or credits before a lender will approve the buyer's loan on the house | Net price locked before repairs are scoped |
| Fees / Costs | Listing commission (negotiable since the 2024 NAR Sitzer/Burnett settlement) plus closing costs, appraisal, and inspection fees | Cash Flow Deals is paid as a separate line item on the closing statement, not a markup on price |
What Step-Up in Basis Actually Resets
Basis is the number the IRS uses to measure your gain or loss when you sell something. Under Internal Revenue Code Section 1014, when someone inherits real property, the basis doesn't carry over from what the original owner paid decades ago. It steps up to the property's fair market value on the date that person died. If your parents bought the house for $60,000 in 1985 and it was worth $310,000 the day they died, your basis for tax purposes is $310,000, not $60,000. That single reset is why most people who sell an inherited house quickly owe little to no federal capital gains tax.
How the Date-of-Death Value Gets Set
Fair market value on the date of death usually comes from a professional appraisal or a comparable-sales analysis done around that date, not months later when you're ready to sell. Under Internal Revenue Code Section 2032, the estate's executor can instead elect an alternate valuation date six months after death, but only if that election lowers the overall taxable value of the estate. Most estates don't use this election. Get a written appraisal dated close to the date of death and keep it. It's the document that proves your basis if the IRS ever asks.
Cash Flow Deals' Process for an Inherited House
Cash Flow Deals' Process: 1. Request your net-price walkthrough so you have a real number to compare against your stepped-up basis before you decide anything. 2. Cash Flow Deals arranges the sale to a real FHA or conventional buyer whose own lender funds the purchase, with title transferring once, directly from you to that buyer. 3. Closing happens on your timeline, without waiting on repair negotiations tied to a mortgage buyer's inspection. 4. You walk away with your net proceeds and the paperwork you need to report the sale accurately on your tax return.
Co-Owned and Joint Property Works Differently
If you owned the house jointly with the person who died, rather than inheriting it solely from them, the step-up usually only applies to their half of the property. Your original share generally keeps its original basis, while the deceased owner's share gets the fair market value reset. That split matters most for siblings who inherit a parent's house together, or a surviving joint owner who bought the property together with the decedent years before the death. Confirm how your specific ownership was titled with a CPA or a licensed Florida real estate attorney before you calculate your basis.
Why This Math Changes How You Should Sell
Cash Flow Deals is a Florida real estate investor that locks in a net price for a seller's house before repairs are scoped, using a novation-based, flat-fee process arranged through its licensed FL brokerage partner, Silver Door Realty — not a traditional listing, and not a brokerage itself. Because step-up in basis usually keeps taxable gain low right after inheriting, sellers who move quickly are often working with a bigger net number than they expect. Knowing that number upfront, before repairs get scoped and before an offer gets negotiated down, is what actually protects the tax advantage step-up in basis gives you. The one exception: if something structural surfaces that was not visible or disclosed before we signed — foundation issues, hidden moisture, old wiring, cast-iron drain failure — we re-cost it and bring the number back to you. You decide. You can walk away. We disclose what we know at offer time so this almost never happens.
Common questions
Do I have to pay capital gains tax on the full sale price of an inherited house?
No. You only owe tax on the gain, which is the sale price minus your stepped-up basis, not the full sale price. Since your basis resets to fair market value at the date of death under Internal Revenue Code Section 1014, that gain is often small if you sell soon after inheriting.
How do I find out what the house was worth on the date the person died?
A licensed appraiser can produce a retrospective appraisal dated to the date of death, or a real estate professional can pull comparable sales from around that time. Keep whatever documentation you use. It's your evidence for basis if the IRS ever questions the number.
Does step-up in basis apply if the house is still in the estate and hasn't been distributed to me yet?
Yes. The step-up happens at the moment of death under federal tax law, regardless of how long probate takes to distribute the property to you afterward. Confirm the exact timing and paperwork with a CPA, since estate-level reporting can differ from your personal return.
What if I make improvements to the house before selling it?
Capital improvements you make after inheriting typically get added to your stepped-up basis, which further reduces your taxable gain when you sell. Routine repairs and maintenance usually don't count the same way improvements do. A CPA can tell you which of your specific costs qualify.
Does Cash Flow Deals need to know my basis before making an offer?
No. Cash Flow Deals locks your net price based on the property itself, not your tax situation. Your basis only matters for what you owe the IRS afterward, so it's worth confirming with a CPA separately from the sale itself.