Hi everyone, I’m trying to confirm whether capital gains apply in my situation.
My dad owned our family home in New Jersey since the early 90s when he bought it for around $250,000. In April 2025 he signed a contract to sell it for $575,000. He passed away in June 2025 before closing, which had to be delayed, and the closing finally happened in September 2025 for the same $575,000.
I was named executrix in his will and received all of the proceeds of the house as an inheritance. I also lived in the house with him for 35 years, but the property was only ever in his name and then in the name of the estate after his death.
The house was in disrepair and sold at a lower price than others in the neighborhood. Comparable homes in good condition were selling for $700,000 to $800,000 if not more in our area. The buyer’s mortgage company sent an appraiser to approve their $475,000 loan since they put $100,000 down, but I never saw what that appraisal came back at.
From what I understand, inherited property gets a step-up in basis to the fair market value on the date of death. Since the contract was already signed at $575,000 in April and the sale closed at $575,000, does that mean there is no taxable capital gain for the estate or for me as the beneficiary?
I am just nervous because if the appraiser had valued it lower than 575k I don’t know how that would affect things., I am also not sure how to request or get that information from the Buyer at this point.
Any confirmation or insight would be super appreciated.
Do I owe capital gains on my dad’s house sale in NJ?
byu/Front_Knowledge_7496 intax
Posted by Front_Knowledge_7496
7 Comments
You are correct. The selling price was the fair market value and you got it for that amount. No gain to you.
If the house was only in your father’s name, you would not owe any capital gains taxes because you would receive a step up in basis upon his death. This means that your “cost” on the house is essentially the price at which it sells.
The appraisal would not affect your tax situation. As other people have said, your father signed the contract to sell, when it passed it went to his estate when it goes to the state it gets a stepped up basis, the estate sold it, so no taxes because the basis was the same as the sale price.
However, I really hope you’re using an estate attorney.
Sounds to me like a house worth $575k sold for $575k.
You would have your own retrospective appraisal done based on the date of death. You wouldn’t get the buyer’s appraisal. But, in this circumstance between having the offer and the closing all within 6 months with a death date right in the middle you should be able to use that documentation for your valuation.
Yup. House was worth 575 when it was given to you, and was sold for 575. You do still need to file the record in your taxes on the Form 1041 though.
Sorry for your loss.
As other commented, you should be good for no tax.
The small sticking point, if you were ever audtited, is what sets the market value, the signed contract or the closing.
I forget what is the time “buffer” from the date of passing to the closing. That is, potentially to be really technical (i’m just a layman here), one would get an appraisal for the fair market value of the property at the time of passing. That would set the cost basis.
But, its tough with real property since it illiquid. Its not like stocks where there is a value publicly available every day the stock market is open.
Meanwhile, the buyer’s appraisal for the loan would have had to been at least $575k to support the loan. In fact, I’m pretty sure if you could get a copy of that appraisal (or pay for a historical one which is common) and its showed a number higher than $575k, then you can could claim a capital loss from the sale on your tax return. Well, at least for federal. In NJ our gross income tax would require some positive capital gains to be offset as I recall.
Hope that helps. Good luck.
Technically as the executor you probably should have had it appraised to establish its value.