Inheriting a home in Florida can be one of the most significant financial events of your life, but it comes with a tangle of legal, tax, and practical decisions that trip up most heirs. Missing a homestead exemption deadline can cost thousands in property taxes. Not understanding step-up in basis could mean paying $50,000+ in unnecessary capital gains tax. And verbal agreements with siblings about what to do with the property can end in lawsuits that destroy family relationships.
The good news: Florida is one of the best states for inheriting property. There is no state estate tax or inheritance tax, the federal estate tax only applies to estates over $15 million per person (made permanent by the One Big Beautiful Bill Act in 2025), and the step-up in basis rule can eliminate massive capital gains bills. This guide walks you through every step -- from probate to property taxes to making the right decision about the home.
Understanding what you've inherited
Before making any decisions, you need to understand two things: how the property was titled (which determines whether probate is required) and how the step-up in basis rule affects your taxes.
The step-up in basis advantage
Under IRC Section 1014, when you inherit property, your cost basis "steps up" to the home's fair market value on the date of death -- not the original purchase price. This is one of the most valuable tax benefits in the entire tax code, and it was preserved permanently by the One Big Beautiful Bill Act.
Parent bought the home in 1995: $150,000
Fair market value at death (2026): $500,000
Your new stepped-up basis: $500,000
Capital gains tax if you sell for $500,000: $0
Without step-up in basis, you would owe capital gains tax on the $350,000 gain -- approximately $52,500 at the 15% federal long-term rate. The step-up eliminates this entirely.
The step-up applies to all inherited property regardless of estate size, and the IRS also grants inheritors a long-term holding period -- so even if you sell the next day, any gain is taxed at the more favorable long-term capital gains rate (0%, 15%, or 20% depending on income).
If someone transfers property to you while they're alive (a gift), you inherit their original cost basis -- no step-up. This is why estate planners sometimes advise against gifting appreciated property during life. If a family member is considering adding you to their deed, make sure they understand the tax implications.
How property title determines your path
The way the deceased held title determines whether you need probate and how quickly you can take control of the home.
No probate required
- Living trust: Property transfers immediately to beneficiaries through the successor trustee
- Lady Bird deed: Automatic transfer at death -- no court involvement needed
- Tenancy by the entirety: Surviving spouse gets full ownership automatically
- Joint tenancy with rights of survivorship: Goes to the surviving joint owner upon death
Probate is required
- Sole ownership: Property titled only in the deceased's name -- must go through court
- Tenants in common: The deceased owner's share must go through probate
- No estate planning: No trust, deed, or survivorship rights were established
Florida probate: do you need it?
Probate is the court-supervised process for transferring property from a deceased person to their heirs. Florida offers two tracks, governed by Florida Statutes Chapter 733.
Summary administration
Available for estates with non-exempt assets under $75,000, or when the decedent died more than two years ago. This simplified process typically takes 2-4 months and costs $1,500-$3,000 in attorney fees and court costs. No personal representative appointment is required.
The Florida Legislature is considering legislation to raise the summary administration threshold from $75,000 to $150,000 in non-exempt assets. Check with a probate attorney for the latest status, as this could significantly expand eligibility.
Formal administration
Required for estates over $75,000 in non-exempt assets (when the decedent died within the last two years). This involves full court supervision, appointing a personal representative, and a mandatory creditor notice period. Expect 6-12 months to complete, with costs typically running 3-5% of the estate value ($3,000-$15,000+).
Florida probate timeline
| Timeline | Step | Details |
|---|---|---|
| Week 1-2 | File petition | Submit death certificate, will (if any), and petition to the circuit court in the county where the decedent lived. Cost: $400-500. |
| Month 1-2 | Appoint personal representative | Court appoints the executor/administrator and issues Letters of Administration. |
| Month 2-3 | Notify creditors | Publish notice in a local newspaper and notify all known creditors. The 3-month claim period begins. Cost: $200-400. |
| Month 3-6 | Inventory and appraisal | File inventory of estate assets, get the home appraised ($300-500), and pay valid debts. |
| Month 6-12 | Distribution and close | Pay final expenses, distribute property to heirs, record new deed, and close the estate. |
Florida homestead property left to a surviving spouse or minor children has special creditor protections under the Florida Constitution. However, probate is still generally required for title transfer unless the property was held in a trust or transferred via a Lady Bird deed. The Florida Bar's attorney directory can help you find a qualified probate lawyer.
The property tax trap
One of the biggest surprises for heirs is the property tax increase that hits after inheritance. If you don't understand Florida's homestead exemption and Save Our Homes rules, you can face a tax bill that doubles or triples overnight.
The original owner's homestead exemption ends at death. This means:
- The property is reassessed to full market value -- the Save Our Homes 3% cap is gone
- You lose the homestead exemption (up to $51,411 off assessed value in 2026)
- Property taxes can double or triple in a single year
| Scenario | Assessed value | Annual tax (est.) |
|---|---|---|
| With homestead + Save Our Homes cap | $250,000 | $2,500 |
| After death -- reassessed, no homestead | $450,000 | $6,750 |
| Tax increase | +$200,000 | +$4,250/year (+170%) |
Can you get homestead on an inherited home?
Surviving spouses: The homestead exemption and Save Our Homes cap transfer automatically to you. There is no reassessment and no tax increase. You can even port the SOH benefit to a new home if you decide to move.
Children and other heirs: You must make the property your permanent residence to qualify for homestead. You'll need to file a new DR-501 application by March 1 of the tax year. The property will be reassessed to full market value first, and your Save Our Homes cap starts fresh at 0%. If you're not moving in, the property will be taxed at the full market rate with no homestead protection.
Key deadlines: Property taxes are assessed based on ownership status as of January 1 each year. File your homestead exemption by March 1 to receive it for the current tax year. The first tax bill is due November 1, with early payment discounts available (up to 4% if paid in November).
- Senior exemption (65+): Additional $50,000 off for qualifying low-income seniors (household income under $38,686 in 2026)
- Veteran disability: Partial to full exemption for service-connected disabilities
- Widow/widower exemption: Additional $5,000 off assessed value
- Disability exemption: Additional exemptions available for qualified disabled persons -- contact your county property appraiser for details
Selling or moving? Your biggest tax benefit is on the line.
Most Florida homeowners have tens of thousands of dollars in Save Our Homes protection — and lose it by accident when they move. Check what yours is worth and what happens to it if you sell.
Your decision framework: keep, sell, or rent
Once you understand the inheritance process and tax implications, you need to decide what to do with the property. Each option has different financial, tax, and practical consequences.
Option 1: Keep and live in it
Making the inherited home your primary residence lets you apply for a new homestead exemption, and you're protected from capital gains tax by the step-up in basis. Keep in mind the property will be reassessed to full market value, so taxes will likely increase significantly compared to what the previous owner paid. Budget for ongoing maintenance, insurance, HOA fees (if applicable), and utilities.
Best for: Heirs who genuinely want to live in the home long-term and can afford the carrying costs after the tax reassessment.
Option 2: Sell it
Selling is the most common choice, especially with multiple heirs. Thanks to the step-up in basis, you'll owe little to no capital gains tax if you sell shortly after inheriting. The proceeds can be divided among heirs cleanly, and you avoid all ongoing ownership costs. The main downsides: closing costs typically run 6-10% of the sale price in Florida, you must wait for probate to close before you can sell, and you may need to invest in repairs to maximize the price.
If you hold the property for years before selling, any appreciation above your stepped-up basis becomes taxable. A home you inherited at a $500,000 basis that you sell five years later for $600,000 means $100,000 in capital gains. Selling within the first year typically means little to no gain above basis. Use our capital gains calculator to estimate your liability.
Option 3: Rent it out
Converting to a rental provides monthly income while the property continues to appreciate. You can deduct expenses like repairs, insurance, property management fees, and property taxes. However, rental properties do not qualify for homestead exemption, so you'll pay higher property taxes. You also take on landlord responsibilities -- tenant management, maintenance, vacancies, and potential liability. This is more complex when multiple heirs are involved and must agree on management decisions.
Best for: Heirs who are comfortable being a landlord (or can afford professional property management) and want long-term passive income.
Step-by-step implementation roadmap
Here's exactly what to do when you inherit a Florida home, in order, with realistic timelines and costs.
Step 1: Secure the property (Week 1 -- $200-500)
- Change locks immediately for security
- Contact the insurance company -- get a vacant home or estate policy (standard homeowner's insurance may not cover a vacant property)
- Secure valuables, important documents, and financial records
- Forward mail to your address through USPS
- Take dated photos of the property's condition for your records
If the inherited home sits uninsured during probate and a hurricane, fire, or water damage occurs, you could face a total loss. Florida's storm season runs June through November -- get proper coverage on day one.
Step 2: Determine if probate is needed (Week 1-2 -- $500-1,500)
- Order 10-15 certified copies of the death certificate from Florida Vital Records
- Review the property deed at the county clerk's office to check how title was held
- Consult with a Florida probate attorney
- Gather the will, any trust documents, and financial records
Step 3: File for probate if needed (Month 1-2 -- $3,000-15,000)
- File petition with the circuit court in the county where the deceased lived
- Court appoints personal representative (executor) and issues Letters of Administration
- Publish creditor notice in a local newspaper
- Notify all known creditors by mail -- the 3-month claim period begins
Step 4: Handle property taxes (Month 1-3)
- Notify the county property appraiser of the owner's death
- Pay any outstanding property tax bills from estate funds
- If you're moving in: file for homestead exemption by March 1
- Understand the property will be reassessed to full market value
- If the reassessment seems too high, consider filing a property tax appeal
Step 5: Make your decision (Month 2-6 -- $500-5,000+)
- Get a professional home appraisal ($300-500) to establish fair market value
- Discuss options with co-heirs (if any) -- get all agreements in writing
- Decide: keep, sell, or rent
- If selling, get repair estimates and decide what's worth fixing
Step 6: Transfer title or sell (Month 6-12)
- Wait for Letters of Administration from the court
- If keeping: file a quitclaim deed or executor's deed transferring to heirs
- If selling: list with a real estate agent and close the sale
- Record the new deed with the county clerk's office
Avoiding costly mistakes
These are the errors that cost Florida heirs the most money. Each one is preventable with the right information.
Not securing insurance immediately
An uninsured inherited home during Florida's hurricane season is a disaster waiting to happen. Get a vacant home or estate policy on day one -- don't assume the existing policy covers you.
Assuming you can sell immediately
You don't legally own the property until probate closes. You cannot sell, refinance, or transfer the home until the court issues Letters of Administration. Exception: surviving spouses usually have immediate rights.
Missing the March 1 homestead deadline
If you're making the property your primary residence, missing this deadline means paying full market-value property taxes for an entire year. You may be able to file late, but it requires demonstrating extenuating circumstances.
Not understanding step-up in basis
Some heirs delay selling because they think they'll owe huge capital gains taxes. In most cases, selling shortly after inheriting means $0 in capital gains thanks to the step-up. Consult a CPA to understand your specific situation.
Ignoring property taxes during probate
Unpaid property taxes can lead to tax liens and eventually a tax deed sale where you lose the home entirely. Pay property taxes from estate funds during probate -- don't wait until it closes.
Verbal agreements with co-heirs
Verbal agreements mean nothing in court. Family disputes over inherited property can escalate into partition lawsuits costing tens of thousands. Get all agreements in writing and signed.
Trying to avoid probate after death has occurred
Once death has occurred, it is too late to retroactively avoid probate. Estate planning tools like Lady Bird deeds, living trusts, and survivorship deeds must be set up while the property owner is alive. If probate is required, work with an attorney to move through it efficiently rather than trying to circumvent the process.
Learn from this experience. Set up a Lady Bird deed, living trust, or at minimum a will for your own property so your heirs avoid the same expensive, time-consuming process. You may also want to add your spouse to the deed as part of your estate plan. If you're considering downsizing to a smaller home, your Save Our Homes savings can transfer with you.
Bottom line: Hiring a probate attorney ($3,000-10,000) and getting a CPA consultation ($500-1,500) is a fraction of what mistakes can cost. This is not the time to handle everything yourself.
When multiple heirs inherit
When siblings or multiple family members inherit a home together, you become "tenants in common" -- each owning an equal share unless the will specifies otherwise. This is where most family conflicts arise.
| Rule | What it means |
|---|---|
| All heirs must agree to sell | Even one holdout can block a sale of the entire property |
| Partition lawsuits are available | Any heir can file under Chapter 64 to force a sale if heirs can't agree |
| Buyouts are possible | One heir can buy out the others at fair market value for their shares |
| Written agreements are essential | Document everything -- who pays what expenses, timelines for decisions, buyout terms |
If there is any disagreement among co-heirs, hiring a professional mediator ($500-2,000) is far cheaper than a partition lawsuit ($10,000-50,000+). Mediation can resolve disputes before they escalate into permanent family rifts.
Frequently asked questions
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