Do You Have to Pay Taxes on Inheritance in Florida?

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By Gary M. Landau, Esq.

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Do You Have to Pay Taxes on Inheritance in Florida?

You’ve inherited money or property from a family member in Florida. While you undoubtedly appreciate the bequest left to you in their will, you may wonder whether there could be a financial downside. Specifically, will you have to pay taxes on your inheritance? Does inherited money count as income when it comes to the IRS? And might selling inherited property create an unexpected tax bill?

Understanding the tax rules of an inheritance can help you make informed decisions during and after the probate process. This is especially the case for people who recently became a beneficiary of a loved one’s estate and are asking, “Do you have to pay taxes on inheritance?”

The good news is that, in many situations, the answer is no, especially when it comes to Florida state taxes. Beneficiaries never owe a direct Florida inheritance tax on income or property they receive after a death, because the state does not have such a tax.

That said, there are certain federal tax rules, capital gains issues, and probate considerations that can sometimes affect inherited assets.

Read below to learn whether a Florida inheritance tax applies, when federal taxes may affect inherited assets, and how probate and estate administration impact beneficiaries. Then call (954) 979-6566 or complete our online form today to schedule a consultation at no cost with the Law Office of Gary M. Landau.

At-a-Glance Overview:

Does Florida Have an Inheritance Tax?

One of the questions we hear most often is, “Does Florida have an inheritance tax?”

The answer is, it does not. Florida does not impose a state inheritance tax on basic assets that are passed to beneficiaries after a death. With no inheritance tax (sometimes also called a “death tax”), Florida residents do not pay state taxes on inherited money, real estate, bank accounts, or other assets they receive from a deceased family member.

The state does not take any portion of inherited cash, investments, a primary residence, business interests, or other property received as an inheritance.

This knowledge often comes as a relief to families, especially to those who inherit property or other non-cash items that might otherwise need to be liquidated to pay such taxes, as happens in other states that do have an inheritance tax.

Is There Still a Federal Estate Tax?

In addition to Florida, the other main taxing authority is the federal government. Especially large estates are subject to a federal estate tax if they reach the asset threshold.

Fortunately, only a small percentage of estates are large enough to trigger the federal estate tax because the exemption amount remains very high. As of 2026, estates valued at $15 million per individual ($30 million for a deceased married couple) are subject to a federal estate tax. This baseline will be adjusted for inflation in subsequent years.

The federal estate tax is not paid by the individual beneficiaries. Instead, an estate of this size fills out its own tax returns and pays the estate tax liability, which is accounted for before distributions are made.

For most families, then, the estate administration process focuses more on transferring assets through probate than paying any estate tax.

Is an Inheritance Considered Taxable Income?

In most situations, an inheritance is not considered taxable income when it comes to paying your own federal income tax, whether that’s cash or other inherited assets.

For example, if a parent leaves their adult children the following assets in Florida, the adult child would not need to pay taxes on them:

  • Money in the bank
  • Money in investment accounts
  • A personal home and/or investment property
  • Personal items in the home

When May Taxes Apply After an Inheritance?

However, this does not mean that taxes are never due on inherited money or assets. For example, income generated from the assets after the accounts are transferred to heirs are typically subject to federal taxes.

For example:

  • Once the accounts are in your name, interest from bank accounts may be subject to federal income tax.
  • Dividends subsequently arising from inherited mutual funds may be subject to federal income tax.
  • Rental income (after expenses) from inherited real estate now in your name may be subject to federal income tax.
  • Distributions from certain inherited retirement accounts may also be subject to federal income tax.

Understanding the difference between receiving inherited assets and earning income from those assets is an important part of estate administration.

Other situations involve different tax rules because they go beyond simply receiving an inheritance of money or property. These may also be subject to federal taxation after the probate has transferred the assets:

  • Selling inherited property that has increased in value after it transferred to the beneficiaries
  • Receiving taxable distributions from inherited retirement accounts
  • Operating a business that has been inherited
  • Receiving taxable distributions from certain trusts

Understanding Capital Gains Tax on Inherited Property

One area that often creates confusion involves the capital gains tax on inherited property.

Suppose a parent purchased a home many years ago for $120,000. At the date of death, the home’s fair market value is $650,000. If the person had lived and sold the property themselves, they would need to pay taxes on their profit, with exceptions based on the tax code.

Under current federal tax rules, though, beneficiaries generally receive what’s known as a stepped-up basis. This means the new value is based on the property’s fair market value at the time of the person’s death, significantly reducing the tax burden compared to the original purchase price.

If the beneficiary sells the inherited property shortly after inheritance for its fair market value, little or no capital gains tax may be owed based on this stepped-up basis.

However, should the property value increase significantly after the date of death before the beneficiary choose to sell it, capital gains taxes may apply to the appreciation above the stepped-up amount.

The same concept might apply to inherited investments, including stocks and mutual funds, although each situation should be evaluated individually.

How the Valuation Date Affects Taxes

In most cases, the value of all the assets is generally dated from the person’s death. In certain situations, however, federal law permits an alternate valuation date for estate tax purposes, sometimes referred to as alternate valuation, if specific legal requirements are satisfied.

Since the date used for valuation can affect future capital gains and other taxes under federal law, these valuation rules are important.

Such rules can be complex, particularly when business interests are involved, which is why families often benefit from discussing these issues during the probate process with legal counsel and a tax professional.

How Are Inherited Retirement Accounts Taxed?

Inherited retirement accounts are generally subject to different tax rules. Whether beneficiaries need to pay subsequent taxes depends on the type of retirement account, the beneficiary’s relationship to the person who passed away, and current federal law.

For example, distributions from an inherited IRA account may be subject to federal income tax,  because taxes were not paid on that income when the person earned and saved it. Taxation rules are largely governed by a law known as the SECURE Act, passed in 2019, which changed many of the distribution rules for beneficiaries beyond spouses. The act requires certain beneficiaries to make withdrawals from the account within a specified time period, although exceptions apply.

The act treats surviving spouses differently, giving them additional options. For example, the surviving spouse may be able to roll the account into his or her own retirement account or choose another distribution method permitted under federal law.

Because inherited retirement accounts involve detailed tax rules, beneficiaries should talk to a tax accountant to understand distribution requirements before making decisions.

Does the estate need to pay its own federal taxes?

Florida estates reaching the $15 million threshold do need to file a federal estate tax return. Smaller estates do not need to do this.

Still, the individual who is deceased does need to pay federal personal taxes on income earned up to the date of their death. Typically this tax return is filed by the surviving spouse or personal representative of the estate, working with a tax accountant if necessary.

Standard tax forms are used. The main difference is checking the “deceased” box and entering the date of death on the tax software (or marking a paper return with this information at the top).

The final return (and any taxes the person owed) is due by April 15th of the year following the person’s death, unless an extension is requested. If a refund is owed, the money becomes part of the estate’s assets.

The Law Offices of Gary M. Landau helps guide clients through all the steps in a probate, including the need to file these final personal tax returns.

How Probate Can Affect an Estate

The probate process plays an important role in transferring property after a person’s death. During a formal probate administration, the personal representative gathers estate assets, pays valid debts and expenses, resolves creditor claims, oversees the person’s final tax returns, and distributes remaining assets according to the will (or Florida law if there is no will).

Steps in the probate process involving the estate’s assets include:

  • Determining what money assets the person had and where they are located
  • Confirming ownership structure of real estate, bank accounts, and other assets
  • Determining which assets must pass through probate and those that pass outside of probate
  • Preparing all documents required by the court to document the assets
  • Coordinating with financial institutions during the probate process.

Some assets, such as jointly owned property, certain life insurance proceeds, payable-on-death accounts, and property held in a revocable trust, typically pass outside of a probate.

An experienced probate attorney can explain how different assets are transferred and which type of probate is best for your family’s situation.

Can Estate Planning Reduce Future Tax Concerns?

Thoughtful estate planning may simplify the transfer of assets and reduce complications and expenses for family members after a death.

Depending on circumstances, planning may include:

  • Creating a legally valid will and other end-of-life documents
  • Determining whether a revocable trust may be beneficial
  • Coordinating ownership of real estate, including how the property is deeded and perhaps adding a “lady bird” deed
  • Planning for a business succession
  • Discussing potential federal estate-tax exposure for large estates

Although Florida does not impose a state estate tax or state inheritance tax, planning can reduce delays, simplify administration, and determine how one’s assets will be distributed.

Frequently Asked Questions

Does Florida have an inheritance tax?

No. Florida does not impose a Florida inheritance tax. Beneficiaries generally do not pay state taxes on their inheritance.

Do I have to report inherited money as income?

In most situations, no. Inherited cash is generally not considered taxable income for federal income tax purposes. However, income earned from inherited assets after they transfer to you may be taxable.

What is the difference between an inheritance tax and an estate tax?

An inheritance tax is paid by a beneficiary in states that levy one. An estate tax is paid by the estate before assets are distributed. Florida has neither a state inheritance tax nor a state estate tax, although the federal estate tax does apply to very large estates.

Will I owe capital gains tax if I sell inherited property?

Possibly. Inherited property generally receives a stepped-up basis, valuing it at its fair market value at the date of death, so capital gains tax generally applies only to appreciation occurring after the inheritance.

Are inherited IRAs taxable?

They can be. Distributions from an inherited IRA are often subject to federal income tax. The SECURE Act establishes distribution rules that vary depending on the beneficiary.

When should I speak with a Parkland-Coral Springs probate lawyer?

If you have questions about probate, estate administration, inherited property, estate tax concerns, your responsibilities as a personal representative or beneficiary, or want to draft your own valid will, speak with a Parkland-Coral Springs probate lawyer early in the process to help avoid unnecessary delays and confusion.

Serving Families in Coral Springs, Parkland, and Throughout South Florida

The Law Office of Gary M. Landau assists individuals and families in Coral Springs, Parkland, Broward County, and surrounding South Florida communities with probate administration, wills, trusts, and related legal matters.

Whether you recently inherited property, are serving as a personal representative, or have questions about the probate process, legal guidance tailored to your circumstances can make the administration of an estate more manageable. Every estate is different, and factors such as the type of assets involved, beneficiary designations, and applicable federal tax rules can all influence the next steps.

Schedule a Consultation with the Law Office of Gary M. Landau

Whether you are concerned about inherited property, estate taxes, or your responsibilities as a beneficiary or personal representative, the Law Office of Gary M. Landau is available to discuss your situation and explain your legal options under current Florida law.

Call our office at (954) 979-6566 or complete our online form today to schedule a consultation at no cost. We happily work with our clients in person, by phone, or on Zoom.

At the LAW OFFICE OF GARY M. LANDAU, we assist clients throughout Coral Springs, Parkland, Broward County and all other counties in Florida. With more than 25 years of experience in our practice areas and countless satisfied clients, attorney Gary M. Landau and his team are uniquely positioned to help you with your probate and real estate title and closing needs in Coral Springs, Parkland, Boca Raton, and throughout Florida. Whether you’re ready to probate a loved one’s estate or to write your own will, or if you are purchasing a home, have inherited a home, want to change your deed, or want a closing agent to handle title insurance and all documents for your closing or refinancing, the LAW OFFICE OF GARY M. LANDAU, P.A. is ready to work with you.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction.

LAW OFFICE OF GARY M. LANDAU, P.A.
7401 Wiles Road, Suite 204
Coral Springs, FL 33067
(954) 979-6566
https://www.garylandau.com/

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Frequently Asked Questions

A will is the simplest way to ensure that your funds, property and personal things will be distributed after your death the way you want them to. Even if you have very few assets, you will benefit from having a will. About half of all Americans die without a will (known in legal terminology as dying intestate). Without a will to indicate your wishes, the court steps in and distributes your property according to state law. A will ensures that your assets will be given to family members or other beneficiaries you designate.

 

Having a will is doubly important if you have young children. One section of the will allows you to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian for your children, who may not be the person you desire.

Many Florida residents have out-of-state wills, drawn up while they were still living among the hills of North Carolina or the hubbub of New York. If the will was valid according to your old state’s laws at the time you made it, it is still legal in Florida. However, if you are a Florida resident, you may benefit greatly by having a new will drawn up in Florida, because it will likely be more easily admitted to probate.

 

It is important to know that each state has its own requirements for what makes a will a legally binding document. For example, Florida doesn’t recognize handwritten wills that haven’t been witnessed (known as “holographic wills”), or oral wills not put into writing, even if other states okay them. There’s also the matter of Florida estate law. In this state, for example, your surviving spouse is entitled to 30 percent of your net probate estate, regardless of what you say in your will. The spouse may also have a “Homestead” interest in property you share here, even if you want your house to go to someone else. In fact, all real property owned in Florida will be subject to this state’s laws, even if you’re a snowbird maintaining a residence in the state where your will was drawn up. Other peculiarities also exist, which is why a Florida will could make things much easier for your heirs.

 

If you would like to have me review your current out-of-state will, I am happy to do so without charge. If it turns out to be in accordance with Florida state laws and procedures, you can continue to rely on it. If not, however, your heirs would rather you discover that now.

It is a good idea to re-read your will every few years to be sure it reflects up-to-date realities (you may not want to leave your heirloom to a niece you are no longer speaking to, nor have someone be named your child’s guardian if they have taken seriously ill since you drafted your will). It is especially important to reexamine your will if:

 

  • You have gotten married since it was last drafted;
  • You have made bequests to people who have fallen out of your favor or are no longer living (I recently updated the will of a man who had left everything to his first wife, who was long deceased), or you have not included people who are now dear to you;
  • You would like to change the person named as the personal representative of the estate. (Note: Florida law does not allow a nonresident of the state to serve in this position, unless it is an immediate family member or certain other relatives);
  • You have acquired pricey or sentimental items that are not accounted for in your will. Do note, though, that Florida law allows you to attach a separate personal property memorandum to your will, detailing who will get which specific items. This list can be changed whenever you want.

Perhaps I should answer this question with where not to store it: in a bank’s safety deposit box. Although it may seem logical to put this with your other important papers, it is often difficult for your heirs to gain access to the box once you die, since the box is sealed then and must be opened in the presence of a bank employee.

 

One good option is to leave your original will with the attorney who drafted it, making copies for your personal representative and other important relatives and letting them know who has the original. For my clients who prefer that I store their original will, I keep it in a fireproof will vault in my office, or in the vault in my bank.

 

As an alternative, you could store the will in a fireproof box or vault in your own home.

 

Wherever you store it, be sure to let your personal representative and other close relatives know where you have put it!

Probate is when the court oversees your assets and liabilities after your death. During probate, the court makes sure that your will is valid and acceptable; that all debts, bills, creditor’s claims, and taxes are paid from your estate’s assets; and that your remaining assets are distributed to your beneficiaries according to your will (or, if no will exists, by Florida law).

 

Probate usually does take longer than most beneficiaries would like. But in order to ensure that everyone with a right to a claim is included in the process, the court requires several steps. If the size and complexity of your estate are minimal, however, the entire process of probate can take as little as a few months. Larger estates that are subject to IRS estate taxes or those involving litigation on the part of creditors or heirs generally take longer, often one or more years.

 

To speed the process along for simple and small estates, the courts allow a shortened form of probate, known as “summary administration,” which requires much less paperwork and time.

A personal representative (PR) is a friend or relative, or an attorney or bank, who is put in charge of the estate until all matters regarding the probate are resolved. (In other states, this person is sometimes called an executor or administrator.) The job of the PR includes identifying all assets, searching for creditors and paying valid claims, filing required estate tax returns if the estate is large enough (the figure escalates over time, according to Congressional laws), coordinating with the probate court and attorneys, and overseeing the distribution of assets–all done under the guidance and assistance of a qualified attorney.

 

Serving as a PR is an important role, and such a person should be selected with care as to who is most willing and best able to serve in this position. By Florida law, your personal representative must be over 18 years of age, and be a blood relative, your spouse, the parent or child of your spouse, or a Florida resident.

Generally, no. If you co-own all property via such legal structures as “tenancy by the entirety” or by “joint tenancy with right of survivorship” the property immediately passed to you upon your spouse’s death. Proof of death is usually all that is needed to pass such jointly owned title for cars, stocks, and other personal property to the surviving spouse.

 

But if even one asset was held solely in the deceased person’s name, or any property is owned in the form of a “tenancy in common,” that estate will be required to go through probate. If the assets are limited, the shorter, simpler form of probate is generally all that is required.
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