Great. Now what?

Are you supposed to sell the inherited property immediately, or can you hold onto it?

And what about capital gains on inherited property, property sale implications, and bank accounts —how much will you owe in taxes?

is there a time limit on selling inherited property in texas

If you’re wondering whether is there a time limit on selling inherited property, the answer is no.

At least not legally. While there’s no strict deadline, things like financial advisor recommendations, previous owner debt, life insurance policy payouts, and tax consequences under the income tax act can push you to act sooner.

Some heirs choose to keep the inherited house as a rental for passive income, while others sell immediately to avoid dealing with property inheritance legal implications.

Whether you plan to sell property quickly for a cash offer or hold it for a while, understanding the cost of acquisition, tax liability, and long-term capital assets classifications is key.

Let’s break it all down—date of acquisition, tax rates, avoiding Texas probate, and the best way to sell your inherited home—so you can make the right decision without second-guessing every step.

is there a time limit on selling inherited property

Holding Period for Inherited Property – How Long Should You Really Wait?

There’s no specific time limit imposed by United States federal law for heirs to sell an inherited house.

But several key factors influence how soon you might want to move forward with the subsequent sale of inherited property:

Property Taxes: You must continue paying property taxes until the home is sold. Some states offer tax exemptions for inherited homes, but this varies based on state laws.
Estate Duty & Tax Burden: The IRS may impose federal estate tax on high-value estates, depending on the property value in Texas. Some heirs may also face inheritance tax, which varies by state.
Joint Ownership Disputes: If multiple heirs have joint ownership, all parties must agree before selling. If one party refuses, legal action may be necessary.
Financial Year Tax Deadlines: Selling within a particular financial year may affect capital gain tax obligations and your income tax act filings.
Market Conditions: The best way to maximize your purchase price is to sell when the Texas real estate market favors potential buyers.

While you’re not legally required to sell immediately, the holding period affects capital gains tax.

Selling within a short timeframe (less than a year) may result in short-term capital gains tax, while holding onto the property for longer can provide stepped-up basis benefits, reducing long-term capital gains tax liability.

Tax Considerations for the Sale of Inherited Property

Federal Estate Tax (2024-2025 Update)

When it comes to estate tax, the numbers change, but the burden remains.

In 2024, federal estate tax applies to estates valued above $13.61 million, and now in 2025, that threshold increases to $13.99 million. If the estate surpasses these amounts, heirs must file a federal estate tax return (Form 706) within nine months of the date of death—a deadline that can sneak up fast if you’re not prepared.

But here’s the kicker: estate tax isn’t a flat rate.

Instead, it’s a sliding scale, with slab rates ranging from 18% to 40%, depending on the total estate value. That’s why understanding deductions is crucial.

Certain expenses—like charitable donations, funeral costs, and outstanding debts—can help lower the estate’s taxable amount, potentially saving heirs thousands.

If the estate includes real estate property, things get even trickier. The IRS requires the home’s fair market value to be determined as of the date of death which is the date of acquisition, meaning heirs often need a professional appraisal to ensure accurate tax calculations.

The good news? The IRS allows for portability rules, meaning a surviving spouse can use any unused portion of their deceased partner’s estate tax exemption. This could effectively double the exemption amount, making it a critical tax-saving strategy.

Additionally, selling long-term capital assets, like an inherited home, comes with tax advantages. Thanks to the new cost basis, heirs benefit from a stepped-up basis, meaning they pay capital gains tax only on the increase in value from the date of acquisition rather than the original purchase price.

State laws further complicate matters. Some states impose an inheritance tax in addition to federal estate tax, meaning heirs could face unexpected bills. And if the estate includes agricultural land or business assets, it may qualify for special tax treatments under the Internal Revenue Code, depending on how the property is used. These nuances highlight the importance of consulting a tax expert before making any major decisions to sell inherited property.

Gift Tax Basis vs Inheritance Tax, Screwed by Gift of a Home, & Gift Tax Timing | Q&A #5

Probate and Legal Requirements

The probate process in Texas is the legal process of transferring ownership of inherited assets after the original owner’s passing. Texas follows the Texas Estate Code, which outlines how probate, wills, contents distribution, and intestate succession are handled in the state. Understanding these legal statutes is essential for heirs sorting out inheritance issues.

This court-supervised process ensures that all financial and legal matters related to the estate are properly handled. Probate is often required unless the property was placed in a trust or transferred through other legal mechanisms that bypass probate.

Key aspects of probate include:

Validating the Will: If the deceased had a valid will, the probate court will authenticate it and ensure it meets legal requirements. If no will exists, state intestate succession laws determine how the property is distributed.
Settling Outstanding Debts: Before heirs receive any assets, all outstanding debts such as home loans, personal loans, and credit cards must be settled from the estate’s funds.
Paying Taxes and Legal Fees: The estate may owe estate duty, property taxes, and legal fees before any distribution to beneficiaries can occur.
Distributing Assets to Heirs: Once debts and taxes are paid, the remaining assets are distributed to the legal heir(s) according to the will or state law.

Selling An Inherited Home In Texas

If You Inherit a House Do You Inherit the Contents?

How Can I Avoid Probate?

Assets That Avoid Probate

Not all inherited assets have to go through probate. Some properties can bypass probate court, allowing heirs to receive them faster and with fewer legal hurdles.

These include:

Homes Held in a Trust: If the deceased placed the home in a revocable living trust, ownership automatically transfers to the named beneficiaries without probate.
Transfer-on-Death (TOD) Deeds: Some states allow homeowners to designate a new owner through a TOD deed, which becomes effective upon death.
Jointly Owned Properties: If the property was owned with a surviving spouse or another person with joint tenancy with right of survivorship, the co-owner automatically inherits the property.

Executor’s Responsibilities

The executor (or sole owner if only one legal heir exists) plays a crucial role in managing the estate settlement process. Their responsibilities include:

✔️ Gathering Necessary Documents: The executor must collect legal documents like the death certificate, valid will, financial records, life insurance policy documents, and any property ownership records.
✔️ Settling Financial Obligations: The executor must ensure that all estate taxes, property taxes, outstanding debts, and stamp duty are paid before distributing assets to heirs.
✔️ Handling Legal Proceedings: If probate is required, the executor must file the case in probate court, notify beneficiaries, and follow legal protocols.
✔️ Managing the Sale of the Property: If the property must be sold to pay off debts or divide assets among multiple heirs, the executor oversees the selling process, ensuring that the sale price aligns with market value and legal obligations.
✔️ Distributing Assets According to the Will or State Law: After all financial matters are resolved, the executor ensures heirs receive their equal shares of the estate, whether through cash proceeds or property transfer. This includes dividing house contents, movable assets, mutual funds, jointly held property, and real estate among heirs.

The probate process can be lengthy, sometimes taking months or even years, depending on the complexity of the estate. Executors often work with estate attorneys, tax experts, and real estate professionals to ensure everything is handled correctly.

If you’re managing an inherited estate, knowing these details can help you prepare for the legal and financial steps ahead.

Best Options To Sell An Inherited Property In Texas

🏡 Traditional Way (via Real Estate Agent)

You list the real estate property with an experienced real estate agent.
Requires repairs, home staging, and multiple showings.
Selling can take weeks to months.
You’ll pay a commission fee (typically 6%-10% of the selling price).

💰 Sell Property As-Is to Cash Buyers

No need for repairs, home staging, or showings.
Sell quickly with a cash offer.
Avoids lengthy selling process and probate delays.
Close within days or weeks instead of months.

Final Thoughts On Property Inheritance

Selling an inherited home comes with legal, financial, and tax complexities. While there’s no specific time limit, delays can result in higher capital gains tax, ongoing costs, and family member disputes.

👇Need a quick sale? Call 469-895-5222 or fill out our contact form below 👇

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** Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or tax advice. Laws regarding inheritance of immovable property, selling an inherited property in Dallas or Fort Worth, and methods of inheritance tax vary by jurisdiction, and tax obligations, including double taxation, may apply based on the Hindu Succession Act or other governing laws. The value of the inherited Texas property, the tax basis, and potential indexation benefits should be carefully evaluated before making any decisions. Always consult with a qualified tax professional or attorney before proceeding with the sale of such property, reporting gains in an income tax return, or determining whether you are subject to capital gains tax.

*** About the Authors: Hilary Schultz is a real estate agent licensed in Texas which is verifiable at TREC, member of the National Association of Realtors NAR, buyer of inherited properties, and recognized authority on the DFW metroplex real estate market. Recently named a Zillow Top Agent for her top-tier service and expertise, Hilary takes pride in helping homeowners solve their real estate problems. She serves on the executive board of her local Texas PTA and is deeply involved in the DFW community.

Together with her husband, Patrick, Hilary brings over 40 years of combined experience and a proven track record of completing more than 2,800 real estate transactions. Their approach emphasizes providing DFW homeowners with valuable insights, honest guidance, and a truly personalized experience. Discover why so many Texas homeowners trust Hilary and her team — read our online reviews to see how we can help you succeed in your inherited home journey.