--- title: "Capital Gains on Inherited Properties in Texas: What You Need to Know" description: Texas is one of those states that falls into a special category when it comes to capital gains on inherited properties. image: https://www.realized1031.com/hubfs/texas-1368287233.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Capital Gains on Inherited Properties in Texas: What You Need to Know Posted Nov 21, 2023 ![texas-1368287233](https://www.realized1031.com/hs-fs/hubfs/texas-1368287233.jpg?width=750&height=392&name=texas-1368287233.jpg) Taxes on inherited property are something that heirs will have to deal with rather than the owner of the estate. However, there are variations across states. Texas is one of those states that falls into a special category when it comes to capital gains on inherited properties. ### Federal Inheritance Taxes Note that an estate tax is a tax on the estate. An inheritance tax is a tax that heirs pay on inherited property. There is currently no federal inheritance tax. However, there is a federal estate tax. This tax only applies at the estate level and isn’t applicable to heirs. No matter which state the estate is in, federal estate taxes must be paid. They can range from 18% to 40%. However, this tax is also dependent on the value of the estate. In 2023, estates with a value less than or equal to $12.92 million do not have to pay an estate tax. Most people's estates won’t have to pay a federal estate tax, given how high the exemption threshold is. For those who do have to pay a federal estate tax (i.e., the value is over the threshold), the tax is levied on the [fair market value](https://www.realized1031.com/blog/what-is-fair-market-value-and-how-is-it-calculated) of the estate. ### State Inheritance Taxes In 2023, six states imposed an inheritance tax. These include Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. As you can see, Texas is not one of these states. Therefore, those inheriting property in Texas do not have to pay an inheritance tax at the state level. Many states do have estate taxes. Some states have flat estate taxes, and some have a progressive estate tax. In a progressive estate tax, taxes increase with the value of the inheritance. Then, there are states with no estate tax. Texas falls into this latter category. However, Texas heirs may still be affected by the federal estate tax based on the estate's value (see above section for thresholds). If the estate is accessed a federal estate tax, the estate's value will be decreased by the amount of taxes and liabilities. What's left over is the amount inherited by heirs. ### Property Taxes In Texas, those living in the inherited property as their primary residence can qualify for the homestead exemption as an “heir property owner.” This exemption will reduce [property taxes](https://www.realized1031.com/blog/how-do-state-property-taxes-work) on the inherited property. While Texas doesn’t have an income or inheritance tax, it does have high property taxes. However, property taxes are not collected by the state. Instead, they are collected by the counties.  Property taxes are due every year. In some cases, a property may have back taxes, which can add to the financial burden of heirs. ### Capital Gains on Inherited Properties When property is inherited, heirs receive it at a [step-up in basis](https://www.realized1031.com/blog/what-is-a-step-up-in-basis). The cost basis for heirs is the market value. So, there are no federal capital gains owed. If the property appreciates, heirs still do not owe capital gains. It isn’t until the appreciated property is sold that capital gains are owed. If the property is immediately sold, it probably didn’t have time to appreciate. If there was no appreciation or the property decreased in value, capital gains taxes would not be owed. While Texas doesn’t have an inheritance tax, federal capital gains taxes will apply for properties that have appreciated and are sold since being inherited.   The various taxes that may be involved in inherited property can get complex. It's best to work with a tax professional to determine any taxes that you might owe on inherited property. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. Download The Capital Gains Tax Calculator [![Cap Gains Calculator For Investors](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/laptop-capital-gains-calculator-spreadsheet.jpg?width=500&height=290&name=laptop-capital-gains-calculator-spreadsheet.jpg "Estimate the cap gains tax owed ...") ](https://www.realized1031.com/blog/capital-gains-on-inherited-properties-in-texas-what-you-need-to-know#blogform) Download Calculator ---   --- ### Cap Gains Calculator For Investors ![Download The Capital Gains Tax Calculator](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/laptop-capital-gains-calculator-spreadsheet.jpg?width=500&height=290&name=laptop-capital-gains-calculator-spreadsheet.jpg) Estimate the cap gains tax owed after selling an asset or property By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Taxes on inherited property are something that heirs will have to deal with rather than the owner of the estate. However, there are variations across states. Texas is one of those states that falls into a special category when it comes to capital gains on inherited properties. Federal Inheritance Taxes Note that an estate tax is a tax on the estate. An inheritance tax is a tax that heirs pay on inherited property. There is currently no federal inheritance tax. However, there is a federal estate tax. This tax only applies at the estate level and isn’t applicable to heirs. No matter which state the estate is in, federal estate taxes must be paid. They can range from 18% to 40%. However, this tax is also dependent on the value of the estate. In 2023, estates with a value less than or equal to $12.92 million do not have to pay an estate tax. Most people's estates won’t have to pay a federal estate tax, given how high the exemption threshold is. For those who do have to pay a federal estate tax (i.e., the value is over the threshold), the tax is levied on the fair market value of the estate. State Inheritance Taxes In 2023, six states imposed an inheritance tax. These include Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. As you can see, Texas is not one of these states. Therefore, those inheriting property in Texas do not have to pay an inheritance tax at the state level. Many states do have estate taxes. Some states have flat estate taxes, and some have a progressive estate tax. In a progressive estate tax, taxes increase with the value of the inheritance. Then, there are states with no estate tax. Texas falls into this latter category. However, Texas heirs may still be affected by the federal estate tax based on the estate's value (see above section for thresholds). If the estate is accessed a federal estate tax, the estate's value will be decreased by the amount of taxes and liabilities. What's left over is the amount inherited by heirs. Property Taxes In Texas, those living in the inherited property as their primary residence can qualify for the homestead exemption as an “heir property owner.” This exemption will reduce property taxes on the inherited property. While Texas doesn’t have an income or inheritance tax, it does have high property taxes. However, property taxes are not collected by the state. Instead, they are collected by the counties. Property taxes are due every year. In some cases, a property may have back taxes, which can add to the financial burden of heirs. Capital Gains on Inherited Properties When property is inherited, heirs receive it at a step-up in basis. The cost basis for heirs is the market value. So, there are no federal capital gains owed. If the property appreciates, heirs still do not owe capital gains. It isn’t until the appreciated property is sold that capital gains are owed. If the property is immediately sold, it probably didn’t have time to appreciate. If there was no appreciation or the property decreased in value, capital gains taxes would not be owed. While Texas doesn’t have an inheritance tax, federal capital gains taxes will apply for properties that have appreciated and are sold since being inherited. The various taxes that may be involved in inherited property can get complex. It's best to work with a tax professional to determine any taxes that you might owe on inherited property.", "articleSection" : [ "Capital Gains" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2023-11-22T01:00:00+0000", "datePublished" : "2023-11-22T01:00:00+0000", "description" : "Texas is one of those states that falls into a special category when it comes to capital gains on inherited properties.", "headline" : "Capital Gains on Inherited Properties in Texas: What You Need to Know", "image" : { "@type" : "ImageObject", "height" : 392, "url" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/texas-1368287233.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/capital-gains-on-inherited-properties-in-texas-what-you-need-to-know", "name" : "Capital Gains on Inherited Properties in Texas: What You Need to Know", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/texas-1368287233.jpg" } ```