Taxes on Selling an Inherited Property in New Jersey
What You and All Homeowners Need to Know
What You and All Homeowners Need to Know
When you inherit a home in New Jersey, one of the first questions that comes up is: “Am I going to get hit with taxes if I sell?”
The short answer: Sometimes.
The longer answer: It depends on when you sell, how much the home has appreciated, and how the estate is structured.
Do You Pay Taxes When You Sell an Inherited Property?
| Here’s the good news: you don’t pay income tax just for inheriting a property in NJ. But if you sell it, taxes may come into play.
The main types of taxes to consider:
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Capital Gains Tax – If the home has increased in value, you may owe tax on the profit.
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Estate Tax – NJ repealed its estate tax in 2018, but federal estate tax still applies to very large estates ($13.6M+ in 2024).
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Inheritance Tax – In NJ, inheritance tax may apply depending on your relationship to the deceased (close family usually exempt, distant relatives may owe).
👉 Most NJ heirs worry about capital gains. That’s where the “step-up in basis” comes in — and it can save you thousands.
What Is the Step-Up in Basis?
| The step-up in basis resets the home’s value to what it was worth on the date of death.
Example:
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Your parents bought the house in 1980 for $80,000.
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Today it’s worth $300,000.
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If you sell at $310,000, you’re only taxed on the $10,000 gain — not the $230,000 difference.
👉 This one rule is why most heirs don’t owe as much tax as they fear.
How Long Do You Have to Sell an Inherited Home to Avoid Taxes?
There isn’t a strict deadline, but timing matters.
⏳ On average, NJ heirs who wait 2–5 years to sell see property values rise enough to owe more in taxes.
| Option 1: Sell Quickly (within 1 year of death)
- The home’s value is based on the date of death appraisal (step-up in basis).
- Any small appreciation within that first year usually results in little to no capital gains.
- Many NJ families sell within the first year to avoid complicated IRS reporting later.
| Option 2: Hold for Years
- If the home rises in value, you’ll owe tax on all appreciation after the date of death.
- Example: Inheriting at $300K, selling 3 years later for $350K = $50K taxable gain.
- Ongoing costs (taxes, insurance, utilities) keep draining money while you wait.
| Option 3: Rent It Out
- Rent collected is considered taxable income, which adds another IRS reporting layer.
- Repairs, vacancies, and tenant disputes can offset profits and create stress.
- When you eventually sell, capital gains still apply based on the stepped-up basis.
How a Cash Sale Simplifies Taxes
Selling the home fast for cash doesn’t erase taxes — but it does make the process cleaner and less stressful.
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No Ongoing Expenses – Taxes, insurance, and utilities stop the day you sell.
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Simpler Paperwork – Executors and heirs get one clear sale transaction to report.
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No Waiting – Close in weeks, not months, so you don’t get hit with higher gains down the road.
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Peace of Mind – No fighting about when to sell — the house is sold, and heirs can split the proceeds.
👉 Stop worrying about IRS forms and deadlines. See how our process works.
🏠 Why New Jersey Homeowners Trust Us
| At Home Purchasing Pros, we’ve helped countless homeowners in New Jersey avoid foreclosure — without judgment and without pressure. We know this process is stressful, but you don’t have to face it alone.
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Sell Your Inherited Home Without the Tax Stress
You can’t avoid every tax, but you can avoid the stress. If you’ve inherited a home in New Jersey, we’ll walk you through the process, help you understand your options, and give you a fair cash offer that makes moving forward simple.
Need more information? Learn more About Us and how we buy houses in New Jersey on our Homepage- or Fill out the form below get your cash offer. Look forward to meeting you soon.
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