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Step-up in basis calculator for inherited property

Inherited property usually gets a new basis equal to its value on the date of death. Sell soon after and there is little or no gain. Enter your numbers below to see your new basis, your gain or loss, and how much gain the step-up removed.

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Step-up in basis calculator

Enter whole-property numbers. Your results show right on the page.

Federal only, illustrative. Basis rules: IRC 1014(a) (value at death), 1014(b)(6) (community property), 2040(b) (spouses' joint property, half included). The 15% figure is the middle 2026 long-term rate (IRS Rev. Proc. 2025-32); your rate may be 0%, 15% or 20%, plus 3.8% NIIT above $200,000 single / $250,000 joint MAGI (IRC 1411). Depreciation after inheritance is taxed at up to 25% (IRC 1(h)(6)).

How the step-up works

The rules behind the numbers

  1. Basis resets at death. Property you inherit takes a basis equal to its fair market value on the date of death (IRC 1014(a)). If the estate elects the alternate valuation date, it is the value 6 months later (IRC 2032). Get a date-of-death appraisal and keep it.
  2. Community property: both halves. In the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), when one spouse dies the survivor's half also steps up, as long as at least half was included in the estate (IRC 1014(b)(6)). A few states, including Alaska, Tennessee, South Dakota, Kentucky and Florida, allow an opt-in community property trust.
  3. Joint ownership elsewhere: half. For spouses who own jointly in a common law state, only the deceased spouse's half is included and steps up (IRC 2040(b)). The survivor keeps the old basis on the other half.
  4. Always long-term. Inherited property counts as held more than a year no matter when you sell (IRC 1223(9)).
  5. What does not step up. IRAs, 401(k)s, annuities and other income in respect of a decedent keep their tax (IRC 1014(c), 691). Property you gave to someone within a year of their death that comes back to you does not step up either (IRC 1014(e)).
  6. Matching the estate return. If an estate tax return was required, your basis generally must match the value reported there (IRC 1014(f), Form 8971). Most estates owe no federal estate tax: the 2026 exemption is $15,000,000 per person (Pub. L. 119-21, July 4, 2025).
The gain grows with time. The step-up fixes basis at one date. Every dollar the property rises after that, and every dollar of depreciation if you rent it, is taxable when you sell. Read selling inherited property: the taxes for the options.

Common questions

Straight answers

What is a step-up in basis?

When someone dies, most property they owned gets a new tax basis equal to its value on the date of death. Heirs who sell are taxed only on the change in value after that date.

Do both halves of a house step up when a spouse dies?

In community property states such as California, Texas and Arizona, yes, if the home was community property. In other states only the deceased spouse's half steps up for property held jointly by spouses.

How do I prove the date-of-death value?

With a qualified appraisal as of the date of death, or the value reported on the estate tax return if one was filed. Keep it with your tax records.

Do inherited IRAs get a step-up?

No. Retirement accounts and annuities are income in respect of a decedent; withdrawals are taxed as ordinary income to the heir.

Can I deduct a loss on an inherited house?

Generally yes if you did not use it personally and sold it as investment property: the loss is a capital loss. A loss on a home you lived in is not deductible.

Related: Selling inherited property: the taxes · Capital gains tax calculator · The over-55 home sale exemption · Inherited IRA calculator

Audit trail

Sources and review

Reviewed for the Retirement Literacy Foundation, a 501(c)(3) education nonprofit. Prepared by Hans Goldstein, retirement educator; IRS Special Enrollment Examination Parts 1, 2 and 3 passed, enrollment pending. Informational only. Not tax, legal or investment advice. Every figure below cites its source so your CPA or attorney can check it.

Figures are 2026 federal amounts unless stated. Examples are illustrative and rounded; your numbers will differ. By , founder, Retirement Literacy Foundation. Last reviewed .

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