Does a child pay taxes on an inherited home?


Q. If a son or daughter inherits their parent’s home, do they have to pay any kind of taxes or capital gains?
— Wondering

A. There are several taxes to consider upon the inheritance of a home.

For deaths occurring after Jan. 1, 2018, there is no New Jersey estate tax. That’s good news.

But New Jersey does still have an inheritance tax, said David Ritter, chair of the tax practice at Brach Eichler in Roseland.

The inheritance tax is determined based on the relationship of the deceased to the inheritor.

“For an inheritance by a son or daughter from their parent, there is no inheritance tax,” Ritter said.

There is no income tax or capital gain tax on property inherited by reason of the inheritance, but there could be when the home is sold.

The tax is based on the sale proceeds in excess of the sum of the value of the house at the date of the inheritance and the costs of the sale such as the broker fees and legal fees, he said.

If you sell the home close to the time you inherited it, you’re probably not going to face a large capital gain. Learn more about why here.

Email your questions to .

This story was originally published on July 12, 2019. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.