Inherited Property Basis Calculator
Start with the estate-tax value, adjust for post-inheritance improvements and depreciation, then estimate gain and federal tax when the property is sold.
Estimated federal tax on sale
$7,500LTCG + §1250 recapture + NIIT; state tax excluded.
Amount realized
$470,000Depreciation recapture portion
$0Inherited property is treated as held long term. Use the estate-tax value from the estate records; community-property rules, alternate valuation, partial interests, and improvements before inheritance need separate basis analysis.
Use the estate’s documented value
The “step-up” can also be a step-down when value fell below the decedent’s basis. The calculator therefore asks for the estate-tax value rather than the decedent’s purchase price.
For rental real estate, depreciation after inheritance reduces basis and the related gain may be unrecaptured Section 1250 gain taxed at up to 25%. The estimate models that separately from the remaining long-term gain.
Inherited property basis FAQs
Is inherited property basis always stepped up?
No. Basis is generally the property's fair market value on the date of death or the estate's alternate valuation date when elected. If that value is below the decedent's adjusted basis, the heir receives a step-down instead.
Is gain on inherited property short term or long term?
Property acquired from a decedent is treated as held for more than one year, so a sale produces long-term capital gain or loss regardless of the heir's actual holding period.
Which improvements increase inherited property basis?
Capital improvements made after inheritance generally increase basis when they add value, prolong useful life, or adapt the property to a new use. Routine repairs and maintenance generally do not.
How does rental depreciation affect an inherited property's sale?
Depreciation allowed or allowable after inheritance reduces adjusted basis. For rental real estate, gain attributable to that depreciation is generally unrecaptured Section 1250 gain taxed at a maximum 25% rate, subject to the Schedule D calculation.
Sources
Related Calculators
Capital Gains Tax Calculator
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Depreciation Recapture Calculator
Section 1245 ordinary-rate and Section 1250 25%-capped recapture, LTCG + NIIT on rental or equipment sales
Estate Tax Calculator
$15M OBBBA permanent exemption (2026), 40% top rate