4 Smart Strategies to Avoid Capital Gains on Inherited Real Estate

(💡 Two of these could earn you up to $500K tax-free!)

Inheriting a property can be both a blessing and a bit overwhelming — especially when it comes to taxes. If you're thinking about selling an inherited home, capital gains taxes may be waiting on the other side of the sale.

But don’t worry — there are some smart strategies that can help you reduce or even avoid those taxes altogether. Here are four powerful ways to protect your profit and make the most of your inheritance:

✨ 1. Step-Up in Basis

This is one of the biggest benefits of inheriting real estate. When someone passes away and you inherit their property, its value is "stepped up" to the fair market value at the time of their death.
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That means if the home has appreciated a lot over the years, you won’t owe taxes on all that gain — only on the difference between the market value at inheritance and the eventual sale price. This can significantly reduce your taxable gain — or even eliminate it altogether.

✨ 2. Primary Residence Exclusion

(💸 Earn up to $500K tax-free!)
Thinking about moving in? It might be worth it. If you live in the home for at least two out of the last five years, it may qualify as your primary residence.

✅ Married couples can exclude up to $500,000 in capital gains from the sale.
✅ Single filers can exclude up to $250,000.
That’s a huge tax break that can put real money back in your pocket!

✨ 3. 1031 Exchange

If the inherited property is a rental or investment, you can take advantage of a 1031 exchange.
This allows you to defer capital gains taxes by reinvesting the proceeds into another like-kind property.

It’s a great strategy if you’re not ready to cash out but still want to build wealth through real estate. Just be sure to follow the specific timelines and rules involved.

✨ 4. Gifting or Trust Strategy

Looking for a long-term strategy? Transferring ownership through trusts or by gifting portions of the property can help minimize taxes — for you and your heirs.

These moves are complex and require professional guidance, but when done right, they can offer serious tax advantages and protect your legacy.

📣 The Best Plan? One That’s Tailored to YOU.

Navigating inheritance and taxes doesn’t have to be overwhelming — but it does have to be smart. Whether you're planning to sell, rent, or keep the home in the family, the right strategy can save you thousands.

📞 Let’s chat about your goals and options before you sell. I’m here to help you make the most of your inheritance — wisely, profitably, and with peace of mind.