Selling an Inherited House: Net Proceeds Calculator
Figures verified November 12, 2026 against IRS Publication 551, Basis of Assets · Update log
Short answer
What you net from an inherited house is the price, minus the selling costs and any mortgage payoff, minus income tax on the gain since the date of death. Because the house's cost basis steps up to its value at death, a sale soon after the death often owes no capital gains tax at all.
Example: a house worth $400,000 at death, sold for $425,000 in a Pennsylvania town with a 5% commission, leaves about $394,500, or $197,250 for each of two heirs. Enter your own numbers below; the calculator knows every state's transfer tax.
Free calculator
Inherited house net proceeds calculator
See what's left after the commission, the transfer tax, closing costs, the mortgage payoff and capital gains tax, and each heir's share. It updates as you type. Amounts like 425k or 1.2m work.
From the date-of-death appraisal. It's the heirs' cost basis for capital gains tax.
The total in the listing agreement. Enter 0 for a sale without an agent.
Title or escrow, the closing attorney, recording. The title company's seller net sheet has the figure.
Mortgage, home equity line or reverse mortgage paid off at closing.
A new roof or kitchen adds to the basis. Repairs and cleaning don't.
Inherited property is always long-term. For your exact rate, use the capital gains calculator.
Leave empty if the seller's state has no income tax.
Pennsylvania, Most towns (1% local)
Each of 2 heirs nets about $197,250 ($394,500 in total).
- Sale price$425,000
- Agent commission (5%)−$21,250
- Transfer tax, seller's shareThe buyer pays another $4,250. Pennsylvania rates−$4,250
- Other closing costs−$5,000
- Mortgage or lien payoff$0
- Cash at closing$394,500
- Capital gains tax estimateNo gain: after selling costs the sale is $5,500 below the $400,000 basis.$0
- Left after tax$394,500
- Each heir's share (1/2)$197,250
A loss on a house nobody lived in, sold to settle the estate, is usually a capital loss: it offsets other gains and up to $3,000 a year of other income. It isn't deductible if an heir moved in and used the house personally.
Pennsylvania also has an inheritance tax, on the house's value at death. Depending on who inherits, it's owed whether or not the house is sold, and it comes on top of the costs above. Pennsylvania inheritance tax calculator
An estimate. Transfer tax from our Pennsylvania rates; capital gains at the rate you picked, on the gain over the date-of-death value. If the estate sells and keeps the gain, it may pay a different rate on Form 1041. Property taxes, utilities and insurance until closing, and any prorations, aren't included.
How the money adds up
The closing agent's statement (the seller's net sheet before closing, the settlement statement after) runs in this order:
- Sale price.
- Agent commission, the total percentage in the listing agreement, shared between the two agents.
- Transfer tax. From nothing in 14 states to several percent in places like Philadelphia, Pittsburgh, New York City and Los Angeles. Who pays depends on the state; see the transfer tax by state.
- Other closing costs: title or escrow fees, the closing attorney where one is used, recording, and any credits agreed with the buyer.
- Payoffs: the mortgage, a home equity line, a reverse mortgage, and any liens or unpaid property tax.
- Cash at closing, paid to the estate (or to the heirs, if they own the house by then).
- Income tax later, on the gain: the price minus items 2 to 4, minus the value at death and any improvements.
Two examples
A house in a Pennsylvania town with the usual 1% state and 1% local transfer tax, which buyer and seller split. It was appraised at $400,000 on the date of death. Two heirs share equally, the commission is 5%, other closing costs are $5,000, and there's no mortgage.
| Sold soon after the death | Sold two years later | |
|---|---|---|
| Sale price | $425,000 | $475,000 |
| Commission (5%) | −$21,250 | −$23,750 |
| Transfer tax, seller's half of 2% | −$4,250 | −$4,750 |
| Other closing costs | −$5,000 | −$5,000 |
| Cash at closing | $394,500 | $441,500 |
| Gain over the value at death | None ($5,500 loss) | $41,500 |
| Federal tax at 15% | $0 | −$6,225 |
| Left after tax | $394,500 | $435,275 |
| Each heir | $197,250 | $217,638 |
Selling soon after the death, the selling costs push the sale below the $400,000 basis, so there's no income tax. Two years and $75,000 of growth later, the heirs owe tax on the $41,500 gain. Pennsylvania would also tax that gain at 3.07%, and both examples leave out Pennsylvania's inheritance tax, which most heirs other than a spouse owe on the $400,000 value whether the house is sold or kept.
Costs that come with an inherited house
- A date-of-death appraisal. It sets the heirs' basis, and the estate may need it for the probate inventory or a state inheritance tax return. A licensed appraiser can value the house as of the date of death even months later.
- Carrying costs until it sells: property tax, insurance, utilities, lawn care and any mortgage payments. Tell the insurer the house is empty, because many homeowner policies limit coverage on a vacant house.
- Clean-out and repairs. Repairs and cleaning are not added to the basis; a capital improvement, such as a new roof, is.
- Probate costs, such as court fees and, where needed, the attorney. See the probate cost calculator.
- Income tax withheld at closing in some states when the seller lives elsewhere, such as New York's Form IT-2663. It's a prepayment that comes back as a credit on that state's return, not an extra cost.
Estate sells or heirs sell?
| The executor sells | Heirs take the deed, then sell | |
|---|---|---|
| Who signs the sale | The executor alone, with letters from the court | Every heir on the deed |
| Transfer tax | On the sale, as for any seller | None on the executor's deed in most states, then the usual tax on the sale |
| Who reports the gain | The estate, on Form 1041 (it can pass to heirs in the final year) | Each heir, on Form 8949 and Schedule D |
| Form 1099-S | In the estate's name and EIN | To each heir for their share |
| Where the money goes | The estate bank account, then out to the heirs | Straight to the heirs |
When the estate sells and keeps the gain, it pays tax at the estate rates, which reach 20% after a much smaller gain than an individual's. In the estate's final year, the gain usually passes out to the heirs on Schedule K-1 and they pay at their own rates. See Form 1041.
The tax rules in one place
- Basis is the value on the date of death (or the alternate valuation date, if the executor chose it on an estate tax return), plus later improvements. Details in the capital gains calculator.
- Always long-term, however soon you sell: 0%, 15% or 20%, plus 3.8% at higher incomes.
- Selling expenses, including the seller's transfer tax and the commission, reduce the gain.
- The $250,000 home sale exclusion applies only if the heir owned and lived in the house as their main home for 2 of the 5 years before the sale. Inheriting it doesn't count.
- A loss on a house nobody used personally is a capital loss: it offsets other gains and up to $3,000 a year of other income.
State taxes to check
- Transfer tax: the calculator above uses each state's rates, including New York City, Philadelphia, Pittsburgh, Chicago, Los Angeles and San Francisco. The full list is in the transfer tax by state table.
- Inheritance tax in five states, on the value at death: Pennsylvania, New Jersey, Maryland, Kentucky and Nebraska. In New Jersey, the buyer's title company will also want tax waivers for the house.
- New York needs Form TP-584 with every deed, and a nonresident estate or heir prepays income tax on Form IT-2663. See Form TP-584, line by line.
- State income tax on the gain, in most states, usually at ordinary income rates.
Optional: get help filing
Get a flat-fee quote for the estate's tax returns
The final Form 1040, the estate's Form 1041 and any state return are the parts executors most often hand off. Leave your email and the rough estate size, and a CPA or Enrolled Agent who prepares estate returns will reply with a fixed price. Free, and no obligation.
Frequently asked questions
How much will I get from selling an inherited house?
The sale price, minus the agent's commission, the seller's share of the transfer tax and the other closing costs, minus any mortgage or lien paid off at closing, minus income tax on any gain over the value at death. For a $425,000 house worth $400,000 at death, sold with a 5% commission in a Pennsylvania town with the usual 2% transfer tax, two heirs end up with about $197,250 each.
Do you pay capital gains tax when you sell an inherited house?
Only on the rise in value since the date of death, because the house gets a stepped-up basis. Selling costs count against the gain, so a house sold within a year or so of the death, for about what it was appraised at, often shows no gain at all. Any gain is long-term, taxed at 0%, 15% or 20%.
Who pays the closing costs when an estate sells a house?
The estate, out of the sale money. The closing agent takes the commission, the seller's share of the transfer tax, the title and recording costs and any mortgage payoff off the top, and pays the rest into the estate bank account. The heirs share what's left under the will, after the estate's other bills.
Can the executor sell the house before probate is finished?
Usually yes, once the court has given them authority to act (letters testamentary, or letters of administration if there's no will). Some states, and some wills, require court approval of the sale or notice to the heirs first. A title company won't close without proof of that authority.
How do siblings split the money from an inherited house?
In the shares the will sets, or the state's intestacy law if there's no will, after every selling cost and the estate's debts are paid. If one sibling buys the others out instead, it's a sale of their shares: some states and cities charge transfer tax on the shares bought.
Does paying off the mortgage reduce the capital gains tax?
No. The payoff comes out of the cash at closing, but it isn't a selling expense, so it doesn't change the gain. The gain is the price minus selling costs, minus the value at death and any improvements.
Is it better to sell through the estate or deed the house to the heirs first?
It depends. An estate sale has one signer (the executor) and the gain goes on the estate's Form 1041. Deeding it to the heirs first is exempt from transfer tax in most states, but then every heir must sign the sale and report their share of the gain. A CPA can compare the two for your estate.
Sources
- 1.IRS: Publication 551, Basis of Assetsirs.gov
- 2.IRS: Publication 523, Selling Your Homeirs.gov
- 3.IRS: Publication 559, Survivors, Executors, and Administratorsirs.gov
- 4.IRS: Topic 409, Capital gains and lossesirs.gov
- 5.IRS: Topic 559, Net investment income taxirs.gov
- 6.IRS: Instructions for Form 1099-Sirs.gov
This information is provided for educational purposes only and should not be considered legal or tax advice. Consult a qualified tax professional for guidance specific to your situation.