Inheriting a property can be both a blessing and a challenge. While it may provide financial opportunities, it often comes with emotional complexities and financial decisions to make during a difficult time. One critical aspect of this process is understanding the tax consequences when selling a house you inherited in Wisconsin. This knowledge can help you make informed decisions about whether to keep, rent, or sell the property. Fortunately, tax laws generally offer some relief to those inheriting properties, making the financial implications less overwhelming than anticipated.

The Basis of an Inherited Property: What It Means for Taxes
When it comes to taxes, the concept of “basis” plays a significant role in determining the taxable amount from the sale of an inherited house. In simple terms, the basis refers to the property’s value used to calculate capital gains or losses. For inherited properties, the basis is adjusted to reflect the property’s market value at the time of the original owner’s death.
For instance, imagine the deceased purchased a home 20 years ago for $50,000, and its market value at their time of death was $250,000. The stepped-up basis means that the property’s value for tax purposes becomes $250,000, not the original purchase price. This adjustment significantly reduces the taxable gain if you decide to sell the property soon after inheriting it.
Taxation of Capital Gains or Losses on an Inherited Property
Selling an inherited property in Wisconsin results in either a capital gain or a capital loss. Capital gains or losses are calculated by subtracting the property’s adjusted basis from its sale price. Here’s where tax law provides some flexibility: regardless of how long you’ve owned the inherited house, the IRS considers the gain or loss from the sale as long-term. This is important because long-term capital gains are typically taxed at a lower rate compared to short-term gains.
For example, if you sell the property for $300,000 and its adjusted basis is $250,000, the taxable gain would be $50,000. Depending on your specific tax bracket and circumstances, this amount may be subject to favorable long-term capital gains tax rates.
Steps to Take Before Selling an Inherited Property in Wisconsin
Navigating the sale of an inherited house involves more than understanding taxes—it also requires completing essential legal and administrative steps. Here’s a breakdown of the process:
- Probate Process
Before selling the property, it’s necessary to go through probate, which is the legal process of distributing the deceased’s assets. In Wisconsin, probate ensures that all debts and claims are settled before the property can be sold. This step may vary depending on whether the deceased left a will or if other heirs are involved. - Resolving Ownership Issues
If multiple individuals inherit the property, all parties must agree on the decision to sell. It’s often beneficial to work with an attorney to ensure everyone’s interests are accounted for and the sale proceeds smoothly. - Calculating Tax Implications
Determine the potential capital gains or losses based on the stepped-up basis. Consulting a tax professional can help clarify your tax obligations and avoid unexpected surprises during tax season. - Preparing the Property for Sale
While inherited homes are often sold “as-is,” making minor repairs or cleaning out personal belongings can attract more buyers and potentially increase the sale price.
Reporting the Sale and Paying Taxes
Once you’ve sold the house, you’ll need to report the sale to the IRS. This involves calculating the capital gain or loss by subtracting the adjusted basis from the sale price. The result must be included on your income tax return. While this may seem complicated, it’s a standard process that ensures transparency and compliance with tax laws. Working with a knowledgeable tax advisor can simplify the reporting process and ensure accuracy.
The Benefits of Selling to a Professional Homebuyer
Selling an inherited house to a professional investor, like Kustom Property Solutions, can be a stress-free and efficient option. Unlike traditional buyers, investors often purchase properties as-is, eliminating the need for repairs, staging, or lengthy negotiations. This approach can be particularly beneficial if you’re looking to avoid the ongoing costs of maintaining the home or if other heirs prefer a quick resolution.
Additionally, local investors are familiar with the market in Wisconsin, ensuring you receive a fair offer based on the property’s current value. At Kustom Property Solutions, we handle every step of the process, from assessing your home to closing the sale, making it simple for you to move forward without hassle.
Why Understanding Taxes Is Essential
Knowing the tax consequences when selling a house you inherited in Wisconsin is essential for making the best financial decision. The stepped-up basis significantly reduces the tax burden, and understanding how to calculate gains or losses ensures you’re prepared for any tax obligations. Whether you choose to keep, sell, or rent the property, being informed about your options helps you navigate this challenging situation with confidence.
Contact Us for Expert Assistance
If you’re still wondering about the tax consequences when selling a house you inherited in Wisconsin, let us help. At Kustom Property Solutions, we specialize in providing guidance and solutions for homeowners navigating inherited property sales. Call us today at (262) 432-1760 to discuss your unique situation and receive a no-obligation cash offer. Selling an inherited house doesn’t have to be overwhelming—our experienced team is here to make the process as smooth and straightforward as possible.
Take the first step toward a stress-free sale by contacting Kustom Property Solutions. Let us handle the details while you focus on what matters most.