Florida Has No Inheritance Tax or State Estate Tax

Good news for Florida heirs: Florida does not impose a state inheritance tax or a state estate tax. You will not owe any Florida state tax simply for inheriting property.

The Stepped-Up Basis — Your Key Tax Benefit

When you inherit property, the IRS resets the cost basis to the fair market value at the date of the decedent's death. This is called the stepped-up basis.

Why this matters: If the deceased bought the home for $100,000 and it was worth $350,000 at death, your basis is $350,000 — not $100,000. If you sell for $360,000, you only owe capital gains tax on $10,000 (the appreciation above the stepped-up basis), not $260,000.

Capital Gains Tax When You Sell

If you sell the inherited property for more than the stepped-up basis, the gain is subject to federal capital gains tax:

• Short-term gains (held less than 1 year): taxed as ordinary income (10–37%)
• Long-term gains (held more than 1 year): taxed at 0%, 15%, or 20% depending on income

Inherited property is automatically treated as long-term regardless of how long you held it — so you always get the lower long-term capital gains rate.

Federal Estate Tax

The federal estate tax applies to estates exceeding the exemption threshold ($13.61 million in 2024). Most estates are well below this threshold and owe no federal estate tax. If the estate is large enough to be taxable, the estate (not the heirs) pays the tax before distribution.

Selling Quickly Minimizes Tax

If you sell the inherited property shortly after inheriting it, the sale price is likely close to the stepped-up basis — meaning little or no capital gains tax. The longer you hold the property, the more it may appreciate above the stepped-up basis, increasing your potential tax liability.

Note: Tax laws are complex and change frequently. Consult a tax professional or CPA for advice specific to your situation.