Losing a loved one is one of life’s most difficult challenges. Amidst the grief and emotional adjustments, there is often a complex layer of administrative duties that falls upon the survivors. One of the most significant of these duties is managing real estate left behind. If you find yourself in the position where you inherit property in the Lone Star State, you likely have questions about the legal process, the financial implications, and the future of the home or land.
At the Hegwood Group, we understand that this is a stressful time. We are here to help clarify the confusion surrounding property inheritance. While we are Property Tax Consultants and not attorneys, we have guided countless Texans through the property tax implications of transferring ownership. In this post, let’s explore how inheriting property works in Texas, the tax realities you will face, and the decisions you need to make to protect your financial future.
How Is Property Passed Down In Texas?
When you inherit property, the path of ownership transfer depends entirely on how the estate was planned — or not planned. Texas law differentiates between estates with a valid will (testate) and those without (intestate).
The Probate Process and Wills
If your loved one left a valid will, the process is generally more straightforward. The will names an executor who is responsible for carrying out the deceased’s wishes, including the transfer of real estate. The will must go through probate, a court-supervised process that validates the document and authorizes the executor to act. Once probated, the title can be formally transferred to you.
Intestate Succession and Affidavits of Heirship
If there is no will, Texas law dictates who inherits the property based on family relationships. This is called “intestate succession.” For example, if a spouse passes away without a will, the surviving spouse usually retains their half of the community property, but the deceased’s half might pass to children, especially if those children are from a previous marriage.
In many cases involving real estate, families can avoid full probate by using an “Affidavit of Heirship.” This is a legal document filed in the county property records that identifies the heirs. It is a common tool for inheriting property when the estate consists mostly of real estate and no other significant assets. However, it requires clear evidence of family history and agreement among all heirs.
Navigating the Tax Landscape
One of the most common panic points for our clients revolves around property taxes. We frequently hear the question: “How much is the inheritance tax in Texas?”
The Myth of Inheritance Tax in Texas
Here is the good news: There is no state inheritance tax in Texas. Texas is one of the few states that does not penalize you for receiving an inheritance. Whether you receive cash, stocks, or real estate, you do not owe the state of Texas a fee simply for receiving the asset.
However, confusion often arises because people conflate state rules with federal ones. While you do not have to worry about an inheritance tax in Texas, extremely large estates may be subject to the federal estate tax. As of 2025, this generally only applies to estates valued over $13.99 million. For the vast majority of people inheriting property, the federal estate tax will not be an issue.
Despite the lack of an inheritance tax Texas statute, there is another tax beast you must tame: Property Taxes in Texas. This is where the real long-term financial impact lies.
What Next: Keep or Sell?
Once the title is in your name, you face a fork in the road. Should you keep the family home, perhaps as a rental or a residence, or should you sell it? Both options have distinct tax implications.
Option 1: Selling the Property
If you decide to sell, you might be worried about capital gains tax. Fortunately, the IRS offers a “step-up in basis” for inherited assets. This means the value of the property is reset to its fair market value on the date of your loved one’s death.
For example, if your parents bought a house in Dallas thirty years ago for $50,000, and it is worth $400,000 when you inherit it, your “basis” becomes $400,000. If you sell it immediately for $400,000, you owe zero capital gains tax. This “step-up” provision makes selling an attractive option for many heirs who do not want to manage a physical asset.
Option 2: Keeping the Property
If you choose to keep the home, you must prepare for the ongoing reality of Property Taxes In Texas. This is where many heirs get blindsided.
In Texas, a homeowner’s property taxes are often kept lower by a “Homestead Exemption,” which limits how much the taxable value can increase each year (the 10% cap). Crucially, when you inherit property, that cap usually disappears. Unless you are a surviving spouse, the appraisal district is allowed to “uncap” the value and re-assess the property at its full current market value.
This can result in a massive jump in the tax bill. A home that was taxed on a value of $200,000 might suddenly be taxed on a value of $400,000 the year after you inherit it. As experienced Property Tax Consultants, we help clients anticipate this shift and determine if they qualify for their own exemptions to mitigate the blow.
Planning Ahead: Avoid Unwanted Inheritance Issues
Inheriting property is a blessing, but without foresight, it can become a burden. To avoid disputes and financial shocks, proactive planning is essential.
Coordinate with Family
If multiple siblings inherit property together, you become co-owners. If one wants to sell and the other wants to keep it, you can end up in a gridlock. It is vital to have open conversations early on. In some cases, one heir can “buy out” the others, financing the purchase through a mortgage on the property.
Update Exemptions Immediately
If you move into the inherited home as your primary residence, you must file for a new Homestead Exemption in your name. Do not assume the previous exemptions carry over. Failing to do this is a common mistake that leads to overpaying on Property Taxes In Texas.
Consult with Professionals
Because the laws regarding inheritance tax in Texas (or lack thereof) and property tax uncapping are complex, you should not go it alone. An estate attorney can handle the title transfer, but you will need Property Tax Consultants to review the county’s valuation of your new asset.
Managing Your New Asset
Whether you keep the property as a rental or your new home, the assessed value will determine your annual carrying costs. County appraisal districts often aggressively value properties that have recently changed hands.
As your Property Tax Consultants, we can review the new appraisal. Just because you inherited a home worth a certain amount on paper doesn’t mean the county’s assessment is fair. We can protest excessive valuations, ensuring that your Property Taxes In Texas remain reasonable. We understand that you are not just managing an asset; you are managing a legacy.
Inheriting property brings a mix of emotions and responsibilities. While you don’t have to worry about an inheritance tax Texas bill, the ongoing property taxes can be substantial. Don’t let the appraisal district determine the financial viability of your inheritance.
Would you like us to review your inherited property’s tax assessment to ensure you aren’t overpaying?
Contact the Hegwood Group today. Let us handle the bureaucracy of property taxes so you can focus on what matters most—honoring your loved one’s memory and securing your family’s future.
FAQ
Q. Do I have to pay inheritance tax in Texas when I inherit a house?
No, there is no state inheritance tax in Texas. You will not owe the state any money simply for receiving the property. However, you should consult with a tax professional to ensure you are clear on federal estate tax rules, which apply only to very large estates.
Q. What happens to the property taxes when I inherit a home?
When you inherit property, the previous owner’s homestead exemption and the 10% appraisal cap typically are removed (unless you are a surviving spouse). This means the taxable value of the home will likely reset to the current market value, which can significantly increase your Property Taxes In Texas.
Q. Can I keep the homestead exemption on an inherited property?
Generally, you cannot keep the decedent’s exemption. You must apply for a new homestead exemption in your own name, provided the home will be your primary residence. As Property Tax Consultants, we can assist you in filing the correct paperwork to secure any exemptions you are eligible for.
Q. What is the difference between inheritance tax and estate tax?
An inheritance tax is a tax paid by the beneficiary (the person receiving the asset), whereas an estate tax is paid by the estate itself before assets are distributed. While people frequently search for “inheritance tax Texas,” neither tax exists at the state level in Texas.
Q. Why should I hire Property Tax Consultants after inheriting a home?
Appraisal districts often increase the value of a home significantly after ownership transfers. Property Tax Consultants can review this new value, protest it if it is too high, and ensure you are not paying more than your fair share of Property Taxes In Texas. This can save you thousands of dollars over the time you own the property.
Important Note: The information provided in this blog post is intended for general discussion purposes only. Readers should consult a qualified property tax consultant for accurate and personalized advice regarding property taxes, as this article should not be relied upon as a substitute for professional guidance.
