Selling an Inherited Home in Texas: Probate, Heirship and the Step-Up in Basis
Do you have to go through probate to sell an inherited house in Texas? Not always. Texas offers several paths, including muniment of title and affidavit of heirship, which are faster and cheaper than full administration. Which one applies depends on whether there was a will and whether the estate has debts.
Almost nobody reads this kind of article for fun. If you are here, someone died, the house is sitting there and you have a stack of paperwork you did not ask for.
So let me say the true thing first. This is usually happening in the worst season of someone's life, while people are grieving and exhausted and making decisions they have never made before. The house is not a transaction to you. It is where the Christmas photos happened. Nothing in this post is going to change that and I am not going to pretend a checklist makes it easier.
What a checklist can do is keep the practical part from becoming a second crisis on top of the first one. That is the entire goal here.
I am going to start with the money because it is the piece with the shortest fuse and the biggest number attached and it is the one families find out about too late.
The step-up in basis, and why it is worth more than everything else in this post
When you sell property, you owe tax on the gain, which is the difference between what you sell it for and your basis in it. For most people basis is roughly what they paid.
Inherited property does not work that way. Under Section 1014 of the tax code, your basis becomes the fair market value on the date of death. Every dollar of appreciation that happened while your parents owned the house simply disappears for tax purposes.
Here is what that is worth in real numbers. This is an example, not a promise and your situation will differ.
Say your mother bought a house in Garland in 1985 for $68,000. She died this year and a licensed appraiser puts the fair market value at the date of death at $345,000. You sell nine months later for $352,000 and closing costs and commission come to about $26,000.
Without the step-up, your gain would be roughly $258,000. At the 15 percent long-term capital gains rate, that is around $38,700 in federal tax.
With the step-up, your basis is $345,000 and your net proceeds are about $326,000. You do not have a gain at all. You have a $19,000 capital loss, which is generally deductible if you did not use the house personally and can offset other gains or up to $3,000 of ordinary income.
That is the difference between writing a five-figure check to the IRS and taking a deduction. Same house, same sale.
Two rules that help you here. Inherited property is automatically treated as long-term no matter how quickly you sell, so you never get pushed into short-term rates. And Texas has no state inheritance tax and no state estate tax so this is a federal conversation only.
The Texas advantage most families never hear about
If your parents were married and owned the house as community property, Texas does something that 41 states cannot.
In a common law state, when the first spouse dies only that spouse's half of the property gets a new basis. In a community property state, under Section 1014(b)(6), both halves step up to fair market value when the first spouse dies. The surviving spouse gets a full reset on the entire property.
This is enormous and it hinges on how the property was characterized. It applies to community property. It generally does not apply to assets held as joint tenants with right of survivorship or to separate property that one spouse owned before the marriage or inherited individually. If your parents' deed says the wrong thing, the benefit can be lost.
The one thing you must do in the first few months
Get a qualified appraisal establishing fair market value as of the date of death.
Not a Zillow estimate. Not a realtor's opinion, mine included. A written appraisal by a licensed, certified appraiser, done retrospectively to the date of death. That document is what substantiates your basis if the IRS ever asks, and it gets harder and more expensive to produce credibly the longer you wait.
The sale gets reported on Form 8949 and Schedule D, with "INHERITED" entered as the acquisition date. Your CPA will know what to do with it. Give them the appraisal.
You cannot sell what you cannot prove you own
Now the title side. A title company will not insure a sale until it can establish who has the legal right to sign the deed. Texas gives you several routes, and the difference between them is months and thousands of dollars.
Path | When it fits | What it does |
|---|---|---|
Independent administration | There is a will, or the heirs agree | Executor sells without court approval. Typically 6 to 12 months |
Muniment of title | Valid will, no unpaid debts except the mortgage | Court admits the will purely as evidence of title. No executor, no administration |
Affidavit of heirship | No will, real property only, heirs agree | Sworn by two disinterested witnesses, recorded in deed records. Many title insurers want it seasoned |
Small estate affidavit | No will, estate under $75,000 excluding homestead | All heirs sign, 30-day wait. Limited usefulness for real estate |
Dependent administration | Heirs cannot agree, or the will requires it | Court approval for every sale. 18 months to 3 years or more |
Transfer on death deed | Recorded by the owner before death | Property passes outside probate entirely |
Muniment of title is the one families miss most often. If there is a valid will and the only debt is the mortgage, you may not need a full administration at all. That single distinction has saved my clients real money.
And there is a deadline. A Texas will generally must be admitted to probate within four years of death. After that it usually cannot be probated, and the estate gets treated as though there were no will, which can send the house to people your parents did not intend. Families lose this window constantly, because grief makes a year disappear and the house is just sitting there not bothering anyone.
If your parent died more than a few years ago and nothing was ever filed, talk to a probate attorney this month, not eventually.
The four ways these sales actually come apart
The legal paths above are the tidy version. Here is what really happens.
Nobody can agree
Three siblings, three opinions and one who does not want to sell at all. This is the most common one by a wide margin and it is not really a legal problem. It is a grief problem wearing a legal costume.
Texas does have a structure for it. Under the Uniform Partition of Heirs' Property Act, when co-owners are related and hold at least 20 percent as cotenants, a co-owner who wants out cannot simply force an immediate sale. The court must first order an appraisal to determine fair market value, then offer the other co-owners the chance to buy the departing owner's share at that price. Forced sale is the last resort, not the first.
That protection is genuinely good law. It is also slow, expensive, and it will cost you the relationship. Use it as the backstop, not the plan. Almost every version of this I have watched go badly could have been avoided by one honest family conversation about price before anyone hired anybody.
There was no will
Everyone assumed the house was theirs. Then the title company asked who the legal heirs are and it turned out there was a first marriage nobody talks about or a sibling who passed and left children or a stepparent whose status nobody ever clarified.
An affidavit of heirship handles the simple version, sworn by two disinterested witnesses who knew the family and are not inheriting. Note that many title insurers want it recorded and seasoned before they will rely on it, which is a real timeline problem when you are trying to sell now. Complicated family trees need a formal heirship determination instead.
Do this early. Finding out about the title defect during the option period is how deals die.
The house has forty years in it
Deferred maintenance, a roof that has been "fine" since 2009 and every closet full. Meanwhile the heirs live in Colorado and can each take three days off.
Two honest pieces of advice. First, do not pour money into a house you are about to sell. There is a version of preparing a home that costs very little and moves the needle and I laid it out in Top 5 Things You Should Do to Prepare Your House for Sale (If You Have No Money to Invest). Start there before anyone books a contractor.
Second, price it honestly for its condition and let the market do the work. An as-is house priced correctly in Sachse, Wylie or Rowlett will sell. The same house priced as though somebody renovated it will sit and every month it sits costs you taxes, insurance and utilities on a vacant property.
Somebody is already living in it
A sibling, a cousin, a family friend who was "helping out." No lease, no rent and no intention of leaving.
This is the hardest one, and I am not going to pretend otherwise. An occupant with no lease still has legal rights and removing them is a formal process, not a conversation. If the estate is in administration, the executor has duties to all the beneficiaries, which sometimes means acting against a family member's wishes.
Get an attorney involved before anyone changes a lock or makes a threat. The wrong first move here creates liability that outlives the sale.
The property tax bill is about to change and nobody warns you
Here is a quiet one that catches families in the second year.
If the house sits vacant, the homestead exemption generally comes off the following year and the tax bill rises. If your parent had an over-65 exemption with a school tax ceiling, that ceiling is not something heirs inherit.
A surviving spouse is treated differently. At 65 or older, they keep the homestead exemption, the over-65 exemption and the ceiling. Between 55 and 64, they keep the homestead exemption and the ceiling and qualify for the over-65 exemption when they turn 65. Under 55, they keep the homestead exemption but lose the ceiling.
If an adult child inherits and actually lives there as a primary residence, they may qualify for an heir property homestead exemption under Texas Tax Code Section 11.13(h) but somebody has to file for it. Nobody does this automatically.
Budget for a higher tax bill on a vacant inherited house than the one your parents were paying. It is one of the main reasons a house that sits for two years costs far more than families expect.
If your parents are still living, read this part
Everything above is harder than it needs to be and most of the difficulty is preventable in an afternoon.
Three things worth doing while everyone is healthy. Make sure there is a valid will and that somebody knows where the original is because a copy is a problem. Look at how the deed is actually titled, since community property characterization is what unlocks the double step-up and a deed that says the wrong thing quietly forfeits it. And consider a transfer on death deed, which Texas has allowed since 2015, is revocable during life and passes the house outside probate entirely when it is recorded before death.
Ask your parents what they want done with the house. Not the legal question. The actual question. The families who handle this well are almost always the ones who had an uncomfortable dinner conversation years earlier.
Frequently asked questions
How long do you have to sell an inherited house in Texas? There is no deadline to sell. But if there is a will, it generally must be admitted to probate within four years of death and missing that window can mean the estate is distributed as if no will existed. There is also no tax advantage to waiting, since inherited property is treated as long-term from day one.
Do I pay capital gains tax on a house I inherited in Texas? Usually very little and often none. Your basis is reset to fair market value at the date of death, so you are only taxed on appreciation after that date. Texas has no state inheritance or estate tax, so any tax owed is federal. Get a date-of-death appraisal to document your basis.
Can one sibling force the sale of an inherited house in Texas? Not immediately. Under the Uniform Partition of Heirs' Property Act, when related co-owners each hold at least 20 percent, the court must first appraise the property and give the other co-owners the opportunity to buy out the sibling who wants out, at appraised value. A forced sale is the last remedy the court reaches for, not the first.
If you found this useful, read these next
- Selling a Home After Divorce in Texas: What You Really Need to Know covers the other life event that turns a house into a legal problem, including why a decree does not update a deed.
- What Happens to Your Taxes When You Sell Your Home in Texas walks through basis, exclusions, and proration for a normal sale, which is useful context for how different the inherited version really is.
If you are sitting on a family home in Sachse, Wylie, Garland, Rowlett, or Rockwall and you do not know what the first step is, call me. I will tell you honestly whether you need a probate attorney before you need a realtor, and most of the time the answer is yes.
Jeanie Marten Real Estate is a brokerage. I am not an attorney and I am not a CPA, and nothing here is legal or tax advice. Probate paths and basis questions turn on facts specific to your family, and this is one area where paying a professional for an hour of their time is the cheapest money you will spend.
Visit MartenTeam.com or book a consultation.
