[graton]

Well I paid $0 in taxes on my parent's death. And when we sold it no income tax was paid. Our accountant checked everything and made sure it was done correctly.

From the page it does say: If you sell the property for more than your basis, you have a taxable gain.

But your basis is set upon the FMV (Fair Market Value) of the property upon death of the decedent.

The basis of property inherited from a decedent is generally one of the following:

1. The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).

Also, selling a house is not typically considered income. It is considered a capital gain. So you don't pay income tax on sale of a house. There might be exceptions if you are a real estate investor, but I don't have any expertise in that area.

[Judson]

Yea, totally wrong here.

My assumption was that a lot of estate planning would be required to avoid major taxes, but seems like the default choice is a pretty good deal (tax-wise) for those involved.

Good to know!

[voisin]

You paid nothing but presumably your parents’ estate paid taxes on the deemed disposition at FMV less its basis.

[graton]

No, it did not.

[voisin]

So there was a bump in tax basis to FMV that essentially creates a tax free capital gain for the beneficiary?

[lakis]

Yes

[graton]

Correct.