Hello again discodave,

If they died in 2008 and their entire estate was less than $2 million, then no estate taxes would be due.

On the home itself, the beneficiaries receive a stepped up basis to the fair market value at the time of death. So whatever the fair market value was at that time becomes the heirs' new basis. If the home is then later sold for a higher price that your new basis, you would owe tax on any gain you had from the sale. Normally when a property is sold shortly after the death of a decedent, there is usually little or no gain, because the selling price is usually the same as or close to your stepped up basis. So if you had no gain from the sale of this home, then no tax would be due on the sale.

The estate does not owe a tax because it had no profits. This tax attorney may be charging you a fee for his services which he planned to take from estate profits. If there were no profits, then he may be coming directly to you to pay those fees. But there would be no actual estate tax due.

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Thank you discodave.

Thank you discodave for the clarification. I just wanted to be sure that state inheritance taxes were not an issue here, but there are no state inheritance taxes in VA.

As long as this home was sold for the same amount or less than the fair market value on the day you inherited the home, then you would owe no taxes here. If the estate itself had been valued at $2 million or more in total assets, then any excess assets would have been subject to estate taxes. Those estate taxes would have been paid by the estate itself, and then the remaining assets would have been distributed to the heirs with no further tax being due. Since you indicated the estate was below the $2 million value, then the only tax at all that would be due by the heirs is if they sold property which they inherited and made a gain on the sale from that property.

But when you inherit property, you automatically receive a stepped up basis, meaning your new basis becomes the FMV on the date of the decendent's death. This is true of all property including real estate and stocks. If your mother had owned shares of stock, your new basis in that stock would be the closing price on the day your mother died. Your basis would not revert back to what she originally paid for the stock. The same is true for the home. Your new basis is the FMV of that home on the day your mother passed away, and unless you sell that home for more than that amount, you have no taxable gain.


This attorney is likely assessing you fees for his services, but the estate itself is not subject to tax on this sale.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you dave.