Inheriting a home can bring mixed emotions. While it may feel like a gift from a loved one, it also comes with responsibilities, especially when it comes to taxes. If you’ve inherited property in Massachusetts, it’s important to understand how different taxes might apply and whether you’ll owe anything when you sell or keep the home.
How the Home Was Inherited Matters
The way you inherited the home plays a big part in what happens next. Massachusetts allows real estate to be owned in different ways, and each comes with its own set of steps.
- Joint tenancy with right of survivorship: If you were a joint owner, the home passes to you automatically when the other owner passes away. No probate is required.
- Will-based inheritance: If you inherited the home through a will, the property must go through probate before ownership is officially transferred. This is a court-supervised process that ensures the will is valid and debts are paid.
- Trust inheritance: If the home was held in a trust, you may be able to avoid probate entirely and take ownership more quickly.
Before making any decisions, review the property title to confirm ownership and check for any outstanding mortgages or liens. That will give you a clearer picture of what you’ve inherited—and whether it’s something you want to keep.
Massachusetts Inheritance and Estate Taxes
Massachusetts does not impose an inheritance tax, meaning you won’t owe the state simply because you received a home from a loved one. However, there is a state estate tax that applies when someone passes away with an estate valued over a certain amount.
As of 2025, the Massachusetts estate tax exemption remains at $2 million. If the total estate is worth more than that, taxes may need to be paid before property is passed on. These taxes are paid by the estate itself—not the beneficiary. If you inherit a home, it should already be free of estate tax obligations by the time you receive it.
There’s also a federal estate tax, but it only applies to very large estates—those over $13.99 million in 2025. For most families in Massachusetts, this won’t come into play.
Capital Gains Tax on an Inherited Home
While inheritance taxes may not apply, capital gains tax could. This is something to keep in mind if you plan to sell the property. When you inherit a home, the tax basis is reset to the home’s fair market value at the time of the previous owner’s death. This is known as a stepped-up basis.
Let’s say your parents bought the home years ago for $150,000. At the time you inherit it, it’s worth $500,000. That $500,000 becomes your new cost basis. If you sell the home for $550,000, you’ll only pay capital gains tax on the $50,000 difference.
This stepped-up basis can significantly reduce what you owe in taxes, especially if the property has appreciated over time. If you sell the home for less than the new basis, you may be able to claim a loss on your taxes.
There’s no capital gains tax if you keep the home. You only pay when you sell.
Deciding Whether to Keep the Home
Just because you’ve inherited a home doesn’t mean you have to keep it. Sometimes, holding on to the property isn’t the right financial move, especially if it comes with costs you’re not prepared to cover.
Some questions to ask:
- Is there a mortgage, and can you afford it?
- Does the home need repairs or upgrades?
- Would renting it out be an option, or would you prefer to sell?
If the home is “underwater”—meaning more is owed on the mortgage than the home is worth—you can choose to decline the inheritance. You’re not legally obligated to accept property that will cost you more than it’s worth.
On the other hand, if the home is in good shape or has potential for appreciation, selling it or using it as a rental could be beneficial. Either way, it helps to think through your goals before making a final decision.
Making Informed Choices About Your Inherited Home
Inheriting a home brings legal, financial, and sometimes emotional decisions. Whether you’re thinking about selling the property, managing capital gains, or including real estate in your own estate plan, we can help.
At Surprenant, Beneski & Nunes, we’ve worked with families across Southeastern Massachusetts to make informed decisions about inherited property. We’ll review your options, explain your responsibilities, and help you find the right path forward. Contact us today to schedule a consultation and take the next step with confidence.