Hello again Customer,
First of all, there is no inheritance tax. Instead the IRS imposes estate taxes, although for the year 2010 even those have been eliminated. Back in 2008 the estate tax exemption was $2 million, but estate taxes only apply to estates of US citizens. So if your father was not a US citizen or if his estate did not exceed $2 million when he died in 2008, then no estate taxes are due.
Estate taxes or inheritance taxes are NOT what you would be liable for here. What I am saying is that you owe no tax at all on the value of the property that you inherited. BUT if the value of that property continues to go up, and you later sell it, then you do owe tax on the gain you had in value from the day you inherited it.
As a simple example -- say you inherited a home that was worth $100,000. You owe no inheritance tax or estate tax on that home. Now if you keep the home for a few years and it continues to go up in value to say $150,000, now if you sell it for $150,000 you will owe tax on that $50,000 gain. The only thing that is exempt from tax is the value of the home as of the day you inherited it. If the value increases after that time, that does not continue to go untaxed, and you will owe tax on the gain when you sell the home.
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Thank you Customer