Licensed Virginia Real Estate Agent · Pearson Smith Realty

Selling an Inherited Home in Virginia — What the Taxes Actually Look Like.

Most heirs dramatically overestimate what they will owe in taxes when selling an inherited Virginia home. The stepped-up basis rule changes the math significantly. Here is what you need to understand — and what questions to bring to your accountant.

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20+ years of inherited and estate property sales in VirginiaLicensed VA agent · Pearson Smith RealtyEvery option explained — cash, as-is, wholetailFree consultation · No pressure
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Dan White is a licensed real estate agent, not a tax advisor. This page is general education. Consult a CPA or tax attorney for advice specific to your inherited property situation.

The Stepped-Up Basis: The Most Important Tax Rule for Inherited Property

When you inherit a property, your cost basis for tax purposes is reset to the fair market value of the property on the date the original owner died — not what they originally paid for it.

This is called the stepped-up basis, and it dramatically reduces or eliminates capital gains taxes when you sell the inherited property — particularly for homes purchased decades ago at much lower prices.

Example: Frederick County Farmhouse

Parent purchased a home in Frederick County in 1975 for $65,000. At their death in 2024, it was appraised at $380,000. You inherit it and sell for $390,000.

  • Without stepped-up basis: Gain = $325,000. Significant tax liability.
  • With stepped-up basis: Your basis = $380,000. Gain = $10,000. Minimal tax liability.

What If You Wait to Sell the Inherited Property?

The stepped-up basis is set at date of death — not date of sale. If the property appreciates further after you inherit it, you owe capital gains on that additional appreciation. Selling sooner typically means less additional gain above the stepped-up basis.

There are also carrying costs — taxes, insurance, maintenance — that accumulate while you hold an inherited property. These factor into the net proceeds analysis.

Virginia Inheritance Tax

Virginia does not have a state inheritance tax. There is no tax owed simply because you inherited the property. The only tax question is capital gains when you sell — and the stepped-up basis rules above apply.

Federal estate tax may apply to very large estates — consult an estate attorney if the total estate value is substantial.

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Dan White
Licensed VA Agent · 20+ Years Frederick County

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