Selling an Inherited Home and Taxes: What Families in CT, MD, MA, and DC Should Know

The Rule That Protects Most Families: Stepped-Up Basis

Under Internal Revenue Code Section 1014, an inherited home takes on a new tax basis equal to its fair market value on the date of death. If your mother bought the family home for $80,000 in the 1970s and it is worth $480,000 on her date of death, your basis steps up to $480,000 and selling at that price means no capital gains tax. You only owe tax on appreciation that occurs after her death.

Estate Tax Thresholds Differ Sharply by State

Estate tax applies only above a state threshold, and the thresholds vary widely across the four jurisdictions:

• Massachusetts: The Probate and Family Court oversees estates, and the exemption is $2 million for 2026, up from $1 million in 2023. Only the amount above $2 million is taxed, with a credit of up to $99,600 that eliminates tax right at the threshold.
• Washington DC: The DC Superior Court Probate Division handles administration. DC's exclusion is $4,988,400 for decedents who die in 2026, up from about $4.87 million in 2025.
• Maryland: The Orphans' Court is the probate court here. The estate tax threshold has been frozen at $5 million since 2019 and is not inflation-adjusted, with a top rate of 16 percent above it. Maryland also stands alone among these four states with an inheritance tax: a flat 10 percent on property left to non-lineal heirs such as nieces, nephews, cousins, and friends, while spouses, children, grandchildren, parents, grandparents, and siblings are exempt.
• Connecticut: The Probate Court handles CT estates, and the exemption is $15 million for 2026, matching the federal level, with a flat 12 percent rate above that line.

Practical Steps for Executors and Personal Representatives

Three habits keep taxes from becoming a problem: get a date-of-death appraisal early, because it sets the basis for any future gain; keep receipts for improvements paid after the date of death, because they raise your basis; and ask a CPA early. Also check with the court before spending estate money on the property, since larger expenditures may need approval, and keeping the court informed protects whoever answers for every dollar.

Explore the State Guides

• Connecticut Probate Court and CT estate tax notes
• Maryland Orphans' Court and inheritance tax notes
• Massachusetts Probate and Family Court process
• Washington DC Superior Court process

Need Help With a Probate Property?

Contact Robert Clarke for compassionate guidance on selling an inherited home in any of the four states.

Contact Robert Clarke