Inheriting a home is both a gift and a challenge. On one hand, it can bring financial opportunity. On the other, it often comes during a time of emotional loss. If you’ve recently inherited a property in Massachusetts, one of the first questions you may ask yourself is: “What are the tax consequences when selling a house I inherited in Massachusetts?”
Fortunately, the U.S. tax system is structured in a way that usually reduces the financial burden on those who inherit property. While it’s always best to consult a tax advisor, here’s a comprehensive breakdown of what you need to know when navigating the process.
Understanding the Tax Basis on Inherited Property
To determine your tax liability, you first need to understand “basis.” The basis is essentially the value used to calculate capital gains or losses when the home is sold.
When someone passes away, the home’s basis is “stepped up” to its fair market value at the time of death. For example, if your relative bought the home 30 years ago for $40,000, but it was worth $400,000 when they passed, your new basis is $400,000. If you sell the home for $420,000 shortly afterward, you only owe capital gains tax on the $20,000 gain.
This step-up in basis significantly reduces the potential capital gains tax you may owe, which is good news for most sellers of inherited property in Massachusetts.
How Capital Gains Are Taxed on Inherited Real Estate
Whether you sell the home immediately or hold onto it, any profit you make is considered a capital gain. Fortunately, inherited property is always taxed as long-term capital gains, regardless of how long you’ve owned it.
In 2025, long-term capital gains are taxed at rates of 0%, 15%, or 20%, depending on your income level. For most middle-income earners, the rate is 15%. This is generally more favorable than ordinary income tax rates.
You’ll calculate your capital gain by subtracting the adjusted basis (the stepped-up value) from the final sale price. Any expenses related to the sale—like repairs, staging, or commissions—can also reduce your gain.
How to Report the Sale of an Inherited Property
Selling an inherited property in Massachusetts must be reported to the IRS. This is typically done using:
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Schedule D of your Form 1040 (for reporting capital gains)
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Form 8949 (to report the details of the transaction)
You’ll list the date of death, fair market value at that time, and the eventual sale price. Make sure to keep any documentation from appraisers or agents to back up your numbers in case of an audit.
Before the sale, you may need to go through probate if the home wasn’t held in a trust. This is the court-supervised process of distributing a deceased person’s assets. Once probate is complete and you have legal authority to sell, the process can move forward.
The Role of Probate in Selling Inherited Property
If you’re inheriting a property that was not placed in a trust, it will likely go through probate in Massachusetts. Probate can last several months depending on court schedules, the complexity of the estate, and whether there are disputes among heirs.
The executor (or administrator) is responsible for:
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Getting the home appraised
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Notifying heirs and courts
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Paying off debts or liens tied to the estate
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Gaining court permission to sell the property
During this period, the property may still be maintained, but it can’t be sold until the court approves. This is where working with a professional home buyer—like Pegasus Home Buyers—can be extremely helpful. We understand the probate process in Massachusetts and can help make the sale smooth, respectful, and legally compliant.
Avoiding Common Mistakes When Selling an Inherited House
When selling an inherited house in Massachusetts, many sellers make mistakes that cost them time or money. Here’s what to watch out for:
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Skipping the appraisal: A professional appraisal helps determine a realistic listing price and supports your tax basis documentation.
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Forgetting about liens or unpaid property taxes: These can delay or block the sale. Address them early.
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Selling before probate is finalized: This can make the transaction void or trigger legal challenges. Wait until the court gives the green light.
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Not consulting professionals: Real estate agents, tax advisors, and legal experts are worth the investment.
Pegasus Home Buyers is well-versed in handling inherited homes and can guide you through these issues, ensuring a stress-free sale with no commission, no repairs, and no headaches.
Benefits of Selling an Inherited Home to a Real Estate Investor
Selling the property to an experienced real estate investor can save you time, reduce stress, and help you avoid out-of-pocket costs. Here are the key benefits of selling to a professional home buyer like Pegasus Home Buyers:
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No repairs required: We buy homes as-is, saving you from fixing up an aging property.
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Fast closing timeline: In many cases, we can close in as little as 7–14 days.
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No agent commissions or fees: You keep more of your proceeds.
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No staging or showings: Avoid the emotional strain of preparing a loved one’s home for public viewings.
This streamlined process is ideal for those looking to quickly and respectfully move forward after a loss—without the drawn-out complications of the traditional market.
Final Thoughts
Selling an inherited house in Massachusetts doesn’t have to be overwhelming. By understanding how the tax basis works, how capital gains are calculated, and how to navigate probate, you can make informed decisions. And if you’re looking for a stress-free sale with minimal paperwork and quick results, Pegasus Home Buyers is here to help.
We’re experienced with Massachusetts probate sales and work directly with heirs to create win-win solutions. Fill out the form on our website today to get started with a fast, fair cash offer for your inherited property.