Of course you know that you probably have to pay taxes when you inherit property from a will or as a gift. You will also have to pay taxes when you sell that property. There are key things to know about the sale of property from an inheritance and taxes, and it is best to know them before you decide to sell the property.

First of all, it does not matter what the decedent paid for the property, it will be taxed at today's fair market value. So, if your grandfather paid $10,000 for a house and left it for you, you need to know its current value because that's what you will be taxed on. Let's say you have that house appraised at $100,000 - that is what you will pay taxes on, not the appreciated value. The house appreciated $90,000 but you will be taxed on the full $100,000 because gifts are calculated only on your gain or loss, not your grandfather's.

When you inherit a property, the taxes on that property remain the same. The property taxes and any costs associated with that property are not going to change because it was inherited rather than purchased. Your taxes on that property, however, will depend on the location of the property and things like whether it is a residential or commercial property. You will need to contact the municipality in which the property is located in order to determine real estate taxes, school taxes, etc.

After determining all of your cost factors, you can use them to decide if you want to sell the property you inherited. This is a matter for you to decide based upon how the sale of this property will affect your financial situation, including if it will raise your tax bracket and whether or not you can afford to hold the property until a more opportune time presents itself.

For this, you should seek the counsel of a tax professional and a real estate broker. A real estate broker can help you get a good idea of the property's current market value and even recommend someone to do an appraisal in order to get a professional, official determination of its worth.

A tax expert will be able to use the information supplied by the real estate broker to calculate how such a sale would influence your tax situation and help you construct a tax strategy around the sale of the inherited property.