You cannot list or transfer an inherited home in Maryland until the estate opens probate and the Personal Representative receives Letters of Administration. The federal step-up in basis rule resets your cost basis to the home’s value at the date of death — meaning most heirs owe little to no capital gains tax when they sell. Maryland inheritance tax is 0% for children, spouses, parents, and siblings, and 10% for everyone else. In Bethesda, where home values regularly exceed $900,000, getting these steps in the right order can protect tens of thousands of dollars.
How do you sell an inherited home in Maryland?
Selling an inherited home in Maryland requires the estate to go through probate and obtain Letters of Administration before you can list or sign a contract. The federal step-up in basis rule typically reduces capital gains to near zero for heirs who sell shortly after inheriting. Maryland inheritance tax is 0% for lineal heirs — children, spouses, parents, siblings — and 10% for non-lineal heirs such as nieces, nephews, and friends. In Bethesda, where home values commonly range from $700,000 to $2 million, navigating this process correctly can mean a difference of tens of thousands of dollars.
By Pey Behin | May 14, 2026
The call comes when you’re not expecting it. A parent passes. A grandparent. An aunt. And somewhere in the grief, someone mentions that the house needs to be dealt with.
If you’ve inherited a home in Bethesda — or anywhere in Montgomery County — you’re managing a real estate transaction on top of everything else. That’s a lot. The good news is that Maryland law, combined with federal tax rules, often works in your favor. The step-up in basis rule alone can save heirs from six-figure tax bills that most people assume are inevitable. The harder truth is that the process has specific steps that must happen in a specific order, and skipping one creates real legal and financial problems down the road.
Here’s what you need to know before making any decisions.
You Can’t Sell Until Probate Opens
In Maryland, real property almost always requires probate — even when there’s a will. The home cannot be listed, contracted, or transferred until the estate is formally opened with the Register of Wills and the Personal Representative (sometimes called the executor) receives Letters of Administration.
For Montgomery County, the Register of Wills office is in Rockville. The process begins with filing the will — if one exists — along with an initial petition. Once the court appoints a Personal Representative, that person has the legal authority to manage, list, and ultimately sell the property on behalf of the estate.
Maryland does have a simplified small estate process, but it applies only when total assets are under $50,000 (or $100,000 if the surviving spouse is the sole heir). Since most Bethesda homes are worth considerably more, the full probate process almost always applies.
One detail that surprises many heirs: you can list the home and accept a contract while probate is still in progress. What you cannot do is close and transfer title until the court clears it. Build a 60–90 day closing window into any contract — experienced buyers and their agents understand this in estate sale situations, and it’s a manageable ask in the Bethesda market.
How Long Does Maryland Probate Take?
Plan for 9 to 18 months from opening the estate to closing the sale in Montgomery County. Courts here can run slower than rural Maryland counties due to caseload. The built-in creditor period — during which creditors have 6 months to file claims against the estate — cannot be shortened or waived.
That timeline doesn’t mean you wait 18 months before doing anything. You can start preparing the home, running comps, and working with an agent during probate. If the property carries ongoing costs — a mortgage, property taxes, HOA fees, utilities — every month matters. Getting a market analysis early helps you decide whether to move quickly or invest in targeted prep work to improve the outcome.
The Step-Up in Basis: The Tax Rule That Changes Everything
If there’s one financial concept that changes the math on selling an inherited home, it’s the federal step-up in basis rule — and most heirs don’t know it exists until they’re already in the middle of the process.
Here’s how it works. When someone passes away, the IRS resets the property’s cost basis to its fair market value on the date of death. Whatever the original owner paid for the home — even if it was 40 years ago — becomes irrelevant for your capital gains calculation.
Concrete example: Your father bought a home in Chevy Chase in 1980 for $175,000. At the time of his death, the home is appraised at $1.05 million. Your inherited basis is $1.05 million — not $175,000. If you sell six months later for $1.08 million, your taxable capital gain is $30,000, not $905,000. The difference in tax exposure is enormous.
There’s a second benefit that often goes unnoticed: inherited property gains are automatically classified as long-term capital gains under federal law, regardless of how long you personally held the property. Long-term rates — 0%, 15%, or 20% depending on your income — are significantly lower than short-term rates. If you want to understand how capital gains are calculated in Maryland specifically, this breakdown covers what Bethesda sellers actually owe on the federal and state levels.
Maryland taxes capital gains as ordinary income — state rates up to 5.75%, plus Montgomery County adds up to 3.2%. But even with those layers, the step-up dramatically reduces what heirs owe. Most heirs selling a Bethesda home sell shortly after inheriting and find their actual tax bill far lower than feared.
Maryland Inheritance Tax: It Depends on Your Relationship
Maryland is one of only a handful of states with a standalone inheritance tax — separate from both estate tax and capital gains. Whether you pay it, and how much, depends entirely on your relationship to the person who passed.
Exempt from Maryland inheritance tax (0%): children, grandchildren, stepchildren, spouses, parents, grandparents, siblings.
Subject to Maryland inheritance tax (10%): nieces, nephews, cousins, friends, unmarried partners, and all other non-lineal heirs.
On a $1 million Bethesda home, a 10% inheritance tax means $100,000 owed before you ever get to closing. If you’re selling as a non-lineal heir, talking to a Maryland estate attorney early — before you make any decisions about the property — is worth the consultation fee many times over.
Maryland Estate Tax: A Separate, Higher Threshold
Don’t confuse inheritance tax (paid by the heir) with estate tax (paid by the estate itself). Maryland estate tax only applies when the total estate — every asset combined, not just the house — exceeds $5 million. Rates range from 0.8% to 16% on the amount above the exemption.
Most families in Bethesda, even with a home worth $1 million or more, won’t hit the $5 million threshold when all assets are factored in. But for larger estates, a CPA or estate attorney should run those numbers before the property is listed.
Sell As-Is or Invest in Preparation?
Once the legal authority to sell is in place, heirs face a very practical question: put money into the property and list it on the open market, or sell it as-is and accept a discount?
In Bethesda, buyers in the $700,000–$2 million range tend to expect move-in condition. An older home that hasn’t been updated in 15 to 20 years will attract a narrower buyer pool — often cash investors and flippers who price in their renovation costs aggressively, usually at a significant discount to retail value.
Some heirs invest in targeted updates before listing: fresh paint, new flooring, landscaping, professional staging. Done strategically, this can return two to three times its cost in sale price. Others — dealing with timeline pressure, out-of-state logistics, or a property in genuinely poor condition — find that a clean as-is listing at a modest discount nets more once carrying costs and renovation risk are factored in.
The math is different in every situation. A home that could list at $1.2M with $35,000 in preparation might still achieve $1.15M as-is to a traditional buyer, or $920,000 to a cash investor. Running those numbers before committing to either path is time well spent. This is exactly the kind of analysis I walk heirs through before any decisions are made — the right answer depends on the property, the timeline, and what the estate can realistically manage.
Closing Costs and Transfer Taxes for Estate Sales
Selling on behalf of an estate doesn’t change Maryland’s standard seller closing cost structure. At closing, expect:
- Maryland state transfer tax: 0.5% of the sale price
- Montgomery County transfer tax: 1% of the sale price
- Montgomery County recordation tax: Tiered, approximately 1.1%–2.5% depending on the price bracket
- Agent commission: Negotiable; the buyer’s agent portion is typically 2.5%–3%
On a $1.1M Bethesda home, those combined costs typically run $65,000–$85,000 before net proceeds. The full breakdown of seller closing costs in Bethesda goes through each line item in detail, and the net proceeds guide shows you how to calculate what the estate will actually walk away with.
Disclosure Requirements Still Apply
The Personal Representative — even if they’ve never lived in the home or know little about its condition — is still subject to Maryland’s disclosure requirements. The Maryland Residential Property Disclosure and Disclaimer Statement requires sellers to disclose known material defects. In practice, many estate sales use the “Disclaimer” option, which shifts more of the inspection responsibility to the buyer and acknowledges that the PR may have limited knowledge of the property’s history.
Your agent will help you determine which approach is appropriate based on the property and how much condition information the estate actually has. Maryland’s seller disclosure rules are specific enough that it’s worth reviewing them before signing any listing agreement.
The Right Order of Operations
If you’ve recently inherited a home in Bethesda or Montgomery County — or you’re anticipating it — here’s how to sequence the process:
- Open the estate with the Montgomery County Register of Wills, or retain a Maryland estate attorney to handle it
- Obtain Letters of Administration establishing the Personal Representative’s legal authority to act
- Get a professional market analysis — know the home’s realistic value before making any decisions
- Evaluate prep vs. as-is based on timeline, property condition, and net proceeds goals
- Work with an agent who has experience with estate sales, Maryland probate timelines, and buyer expectations specific to Bethesda
The step-up in basis rule gives heirs far more financial flexibility than most people walk in expecting. The probate timeline is manageable when you plan for it. And the taxes — outside of the 10% inheritance tax for non-lineal heirs — are often far lower than heirs fear at the start.
Frequently Asked Questions
Can you sell an inherited home in Maryland before probate is complete?
You can list the home and accept a contract before probate closes, but you cannot transfer title until the estate is cleared. This typically means building a 60–90 day closing window into the contract, which experienced buyers and agents can accommodate. The Personal Representative must have Letters of Administration before signing any sales documents.
Do heirs pay capital gains tax when selling an inherited home in Maryland?
Usually very little — because of the federal step-up in basis rule. Your cost basis resets to the home’s fair market value on the date of the original owner’s death. If you sell shortly after inheriting, you’re only taxed on appreciation above that reset value. Inherited property gains are automatically treated as long-term, giving you the lower federal rate (0%, 15%, or 20%). Maryland also taxes capital gains as ordinary income at up to 5.75% state plus county rates.
Who pays Maryland inheritance tax when a home is sold from an estate?
The inheritance tax is paid by the heir receiving the property — but it only applies at 10% for non-lineal heirs (nieces, nephews, friends, unmarried partners). Children, spouses, parents, grandparents, siblings, and stepchildren all pay 0%. If you’re in the exempt category, this isn’t a cost you’ll face at closing.
How long does it take to sell an inherited home in Maryland?
From opening probate to closing, plan for 9 to 18 months in Montgomery County. Probate itself typically takes 6 to 12 months. Once the estate is open, you can often list and market the home while probate is still in progress — you just can’t close until the court clears it. The required creditor period (6 months) is the largest fixed timeline element you cannot compress.
Does the estate have to pay Maryland estate tax before the home can be sold?
Maryland estate tax only applies to estates worth more than $5 million in total assets — and it’s paid by the estate, not the individual heir. Many families in the Bethesda area won’t owe state estate tax at all, though an estate attorney or CPA should verify based on the full picture of the deceased’s assets.
Selling an inherited home is a real estate transaction wrapped around a grieving process. The financial side — step-up in basis, inheritance tax, probate timelines — has more upside than most heirs expect going in. But it takes planning, the right sequence, and someone who knows both the Bethesda market and the Maryland process well.
If you’ve inherited a home in Bethesda or Montgomery County and want to understand what the process looks like for your specific situation, I’m happy to walk you through it. Reach out anytime.
About Pey Behin
Pey Behin is a residential real estate agent serving the Washington, DC metro area, with a focus on Bethesda, Montgomery County, and Northern Virginia. He works with buyers and sellers who want clear strategy, data-driven pricing, and direct guidance throughout the transaction process. His approach combines market analytics, negotiation expertise, and modern marketing to position clients effectively in competitive conditions.
