Real Estate · Estate Administration
Selling Inherited Real Estate in Pennsylvania: What to Address Before You List
Selling inherited property in Pennsylvania requires clearing the inheritance tax lien, confirming executor authority to sell, establishing clear title, and understanding the stepped-up basis before you set a price. The order you do these things in determines whether the sale closes on time and how much of the proceeds you keep under 72 P.S. § 9145.
Pennsylvania inheritance tax on real estate is governed by 72 P.S. § 9145. Executor authority to sell estate real estate is governed by 20 Pa.C.S. Title 20. Federal capital gains treatment of inherited property is governed by IRC § 1014.
Inherited property comes with a tax lien, a title requirement, and a stepped-up basis that can save you significant capital gains tax. Addressing these before you list prevents a closing delay that derails the sale.
Call 412-351-4422 or schedule a consultation to discuss selling inherited property.
The Pennsylvania Inheritance Tax Lien
Pennsylvania inheritance tax creates an automatic lien on all property in a decedent’s estate from the date of death. That lien must be paid or bonded before title can transfer at closing.
Pennsylvania inheritance tax is imposed on the transfer of property at death at rates that depend on the relationship between the decedent and the beneficiary. Transfers to a surviving spouse are taxed at zero percent. Transfers to lineal descendants, children, grandchildren, are taxed at 4.5 percent. Transfers to siblings are taxed at 12 percent. Transfers to anyone else are taxed at 15 percent. The tax is due nine months from the date of death. A 5 percent discount applies to inheritance tax paid within three months of death under 72 P.S. § 9145. The lien attaches to the real estate from the date of death and encumbers the title. A buyer’s title company will not insure title without evidence the lien has been satisfied or bonded.
Three siblings inherited a Pittsburgh rental property from their father. The property was worth $380,000. They listed it eight months after his death without addressing the inheritance tax lien. They accepted an offer and opened escrow. The title company flagged the lien two weeks before closing. The inheritance tax had not been paid and the nine-month deadline was approaching. The siblings had to negotiate a closing delay, file the inheritance tax return on an emergency basis, and wire payment from estate funds before the sale could proceed. The buyer nearly walked. The 5 percent discount for early payment had already been lost.
Executor Authority to Sell
An executor has authority to sell estate real estate only if the will grants that power or the Orphans’ Court authorizes the sale. Without that authority the title is unmarketable.
Most wills drafted in the last thirty years include a broad power of sale granting the executor authority to sell real estate without court approval. If the will includes that language the executor can list and sell without a court petition. If the will does not include a power of sale, or if the property passes to heirs through intestacy without a will, the executor or administrator must petition Orphans’ Court for authority to sell before signing a listing agreement. Title companies will require evidence of the executor’s authority, either the will provision or the court order, before insuring the transaction. Attempting to sell without confirmed authority creates title defects that delay or kill the closing.
The Stepped-Up Basis and Capital Gains Tax
Inherited property receives a new cost basis equal to its fair market value at the date of death. That reset basis determines how much capital gains tax you owe when you sell, and it is one of the most valuable tax benefits available to heirs.
Under IRC § 1014, the basis of inherited property is stepped up to its fair market value as of the date of the decedent’s death. If your father bought a Pittsburgh duplex in 1978 for $45,000 and it was worth $420,000 when he died, your basis in the property is $420,000, not $45,000. If you sell it for $420,000 shortly after inheriting it you owe no federal capital gains tax on the $375,000 of appreciation that occurred during your father’s lifetime. That gain is never taxed. Pennsylvania does not impose a separate capital gains tax, capital gains are taxed as ordinary income under the Pennsylvania personal income tax. But the stepped-up basis eliminates the federal gain that would otherwise be taxable.
A Pittsburgh heir inherited a Shadyside rowhouse her mother had purchased in 1965 for $18,000. At her mother’s death in 2024 the property was worth $485,000. Her accountant told her the stepped-up basis meant she owed no federal capital gains tax if she sold promptly. She listed the property and accepted an offer at $490,000. Her federal capital gains tax on a $5,000 gain above the stepped-up basis was minimal. Had she received the property as a gift rather than an inheritance, her basis would have been $18,000 and her taxable gain would have been $472,000. The difference between inheriting and receiving a gift of the same property was more than $70,000 in federal tax.
Title Issues in Inherited Property Sales
Inherited property titles often have defects that must be resolved before a sale can close. The longer the property has been in the family the more likely title problems exist.
Common title issues in inherited property sales include missing deeds from prior transfers, property held in a deceased person’s name that was never re-titled, co-ownership interests from prior generations that were never formally conveyed, open mortgages or judgment liens against the decedent, and tax liens from unpaid property taxes. A title search before listing identifies these issues and gives time to resolve them before a buyer is waiting at the closing table. Issues discovered at closing are more expensive and more likely to kill the deal than the same issues discovered before listing.
When Multiple Heirs Must Agree
All co-owners must sign the deed. One heir who refuses to sell cannot be forced out without a partition action in the Court of Common Pleas.
A will that divides property equally among three children creates three equal tenant-in-common owners. All three must sign the deed at closing. If one refuses to sell the other two cannot convey their interests and force the third to sell through a simple listing. The dissenting heir’s interest cannot be sold without their consent or a court order. A partition action in the Court of Common Pleas can force a sale over the objection of a co-owner, but it takes time and money. For a full discussion of the partition process and what it costs, see our page on partition actions in Pennsylvania. Before pursuing litigation, mediation and negotiated buyouts are generally faster and less expensive.
Four siblings inherited a Squirrel Hill house equally. Three wanted to sell. One wanted to keep it as a rental. The dissenting sibling would not sign a listing agreement and would not buy out the others at any price they considered fair. The three agreed to file a partition action. Before the hearing date the dissenting sibling agreed to a buyout at an appraised value. The partition threat resolved what two years of family negotiation had not. The property sold six months after the partition petition was filed.
The Order of Operations for Selling Inherited Property
Address the tax lien, confirm executor authority, and resolve title issues before listing. Doing these in the wrong order costs time and money at closing.
The correct sequence is: open the estate with the Register of Wills and have the executor or administrator appointed; obtain an appraisal of the property to establish the stepped-up basis and the inheritance tax value; file the inheritance tax return and pay the tax within nine months of death to avoid penalties (within three months to get the 5 percent discount); confirm the executor’s authority to sell under the will or obtain Orphans’ Court authorization; order a title search to identify any defects; resolve title defects before accepting a purchase offer; and then list and sell. Heirs who list before completing these steps often face closing delays, buyer demands for price reductions, or lost deals when title issues surface at the last minute.
If you are selling inherited property and are not sure whether the tax lien has been addressed, whether the executor has authority to sell, or whether the title is clear, find out before you list.
Lebovitz & Lebovitz, P.A. handles the legal work for inherited property sales in Pittsburgh and throughout Western Pennsylvania. Call 412-351-4422 or schedule a consultation.
Frequently Asked Questions About Selling Inherited Property in Pennsylvania
Does Pennsylvania inheritance tax have to be paid before the property is sold?
The inheritance tax lien must be satisfied or bonded at or before closing. The tax is due nine months from the date of death. Most title companies require evidence that the tax has been paid before they will insure the transaction. Paying within three months earns a 5 percent discount under 72 P.S. § 9145.
What is the stepped-up basis and how does it affect my taxes?
The stepped-up basis resets your cost basis in inherited property to its fair market value at the date of the decedent’s death. When you sell the property, you owe capital gains tax only on appreciation above the stepped-up basis. Property that was worth $400,000 when you inherited it and sells for $410,000 produces a $10,000 gain, not a gain based on what the decedent originally paid decades ago.
Can I sell inherited property if I am not the executor?
Generally no. The executor or administrator of the estate has authority over estate property. An heir who inherits real property outright under the will, or through intestacy after the estate is closed, can sell it as the owner. But while the estate is open, estate real property is administered by the executor. If the executor is not acting, a beneficiary can petition Orphans’ Court to compel action or seek appointment of a successor administrator.
What happens if one of the heirs refuses to sell?
When inherited property is held by multiple heirs as tenants in common, any co-owner can file a partition action to force a court-supervised sale. A dissenting co-owner cannot block the sale permanently, but they can delay it and increase costs. Before litigation, a negotiated buyout or mediated agreement is generally faster and less expensive than a partition proceeding.
How long does it take to sell inherited property in Pennsylvania?
The timeline depends on how quickly the estate is opened, whether the inheritance tax is paid promptly, and whether title issues require resolution. Properties with clean titles, paid inheritance tax, and clear executor authority can close as quickly as any other real estate transaction. Properties with title defects, unpaid taxes, or co-ownership disputes can take six months to a year or more.
This page provides general information about selling inherited real estate in Pennsylvania. It does not constitute legal or tax advice. Consult a qualified attorney and tax advisor for advice specific to your situation.
Related Practice Areas
Estate Planning and Probate · Real Estate Law · Partition Actions · Executor Duties · Pennsylvania Inheritance Tax
Selling inherited property in Pennsylvania requires clearing a tax lien, confirming executor authority, and establishing clean title before a buyer is found. The stepped-up basis is one of the most valuable tax benefits available to heirs, but it requires an appraisal at the time of death to document properly. Address these issues before listing, not during escrow.