Bottom line: Texas does not have an inheritance tax or a state estate tax. When you inherit a house in Texas, you owe no Texas state tax just for receiving it. Federal rules still apply in some cases, and capital gains may apply when you sell — but the stepped-up basis rule usually minimizes or eliminates your tax bill.
Texas Has No Inheritance Tax
Texas abolished its inheritance tax in 2015. You will not pay any Texas state tax just because you inherited a house. Period. Many people worry about this unnecessarily — the answer is simply no.
Texas Has No State Estate Tax
Texas also does not have a state estate tax (sometimes called a "death tax"). The estate itself pays no Texas-level estate tax regardless of its size.
Federal Estate Tax — Does It Apply?
The federal government does have an estate tax, but it only applies to very large estates. For 2026, the federal estate tax exemption is approximately $13.61 million per person ($27.22 million for married couples). The vast majority of inherited Texas homes will fall well under this threshold. Unless the total estate is worth more than $13.61 million, no federal estate tax applies.
What About Capital Gains When You Sell?
This is where most people have questions. When you eventually sell the inherited house, capital gains tax may apply — but here's the key concept that often surprises people: the stepped-up basis.
The Stepped-Up Basis Explained
When you inherit property, your cost basis for tax purposes is "stepped up" to the fair market value of the home on the date of the original owner's death — not what they originally paid for it.
Example: Your parent bought a house in 1985 for $80,000. When they passed away in 2024, it was worth $280,000. You inherited it. Your stepped-up basis is $280,000 — not $80,000. If you sell it quickly for $285,000, you only have a $5,000 capital gain, not a $200,000 gain.
This stepped-up basis rule often dramatically reduces (or eliminates entirely) the capital gains tax on inherited properties — especially if you sell relatively soon after inheriting.
What If You Keep the Property and Sell Later?
If you hold the inherited property and its value increases significantly before you sell, you would owe capital gains tax on the appreciation above the stepped-up basis. At that point, you'd be taxed on the growth during your ownership period.
What About Property Taxes?
Property taxes are separate from inheritance taxes. Once you inherit the home, you become responsible for ongoing property taxes to the county. In Texas, property taxes are assessed annually and can be significant — especially in Montgomery and Harris County. This is one reason many heirs choose to sell quickly rather than hold a property they don't need.
Should You Sell the Inherited House Fast?
From a tax perspective, selling quickly after inheriting often makes sense:
- The stepped-up basis means your capital gains are minimal if you sell soon
- Every month you hold it costs money — property taxes, insurance, utilities, maintenance
- If there's a mortgage, payments continue until the home is sold
- If multiple heirs are involved, a clean cash sale resolves everything simply
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This article is for general informational purposes only and does not constitute tax or legal advice. Tax laws change and individual situations vary. Consult a licensed CPA or tax attorney regarding your specific inherited property situation.