How to Sell an Inherited House in Tennessee

Inheriting a house is rarely simple. You're often dealing with grief, family dynamics, and suddenly becoming responsible for a property you may not want—or can't afford to keep.

If you've inherited property in Tennessee, you have options. This guide walks you through everything you need to know: probate requirements, tax implications, timelines, and how to sell—whether you want top dollar or just want to move on quickly.

The good news: Tennessee is one of the more favorable states for inheriting property. There's no state inheritance tax, probate is relatively straightforward, and the stepped-up basis rule can significantly reduce your tax burden.

What You Need to Know Before Selling an Inherited House in Tennessee

Before you list the property or accept any offers, understand these key facts about inherited property in Tennessee:

Tennessee Has No State Inheritance Tax

Tennessee eliminated its inheritance tax in 2016. This means you won't owe any state tax simply for inheriting property, regardless of its value or your relationship to the deceased.

According to the Tennessee Department of Revenue, the inheritance tax was fully phased out and no longer applies to any estates.

Federal Estate Tax Only Applies to Large Estates

For 2026, the federal estate tax exemption is $15 million per person (increased and made permanent under the One Big Beautiful Bill Act). This means:

• Estates under $15 million owe zero federal estate tax
• Married couples can effectively exempt up to $30 million
• Only estates exceeding these thresholds pay the 40% federal estate tax

For the vast majority of Tennessee families, federal estate tax won't be a concern.

You May Still Owe Capital Gains Tax

While inheritance itself isn't taxed, selling the property may trigger capital gains tax. The good news: the stepped-up basis rule works heavily in your favor (more on this below).

Tennessee Has No State Capital Gains Tax

Tennessee doesn't tax capital gains at the state level. Any capital gains tax you owe will be federal only—currently 0%, 15%, or 20% depending on your income level.

Does an Inherited House Have to Go Through Probate in Tennessee?

In most cases, yes—real property in Tennessee must go through probate before it can be legally transferred to heirs. However, there are important exceptions.

When Probate IS Required

Probate is typically required when:

• The deceased owned property solely in their name
• There's a will that names beneficiaries for the property
• The deceased died without a will (intestate) and owned real estate

The probate court validates the will (if one exists), appoints an executor or administrator, and oversees the distribution of assets to heirs.

When You Can Skip Probate

You may be able to avoid probate entirely if:

• Small estates under $50,000: Tennessee's Small Estate Affidavit allows simplified transfer for estates valued at $50,000 or less with no real property, filed 45 days after death
• Property held in a living trust: Trust assets pass directly to beneficiaries without probate
• Joint ownership with right of survivorship: Property automatically passes to the surviving owner
• Transfer-on-death deed: Tennessee allows TOD deeds that transfer property directly upon death
• Tenancy by the entirety: For married couples, property passes automatically to the surviving spouse

Tennessee Intestate Succession (No Will)

If the deceased didn't leave a will, Tennessee's intestate succession laws determine who inherits:

• Surviving spouse + children: Spouse gets either 1/3 of the estate or a child's equal share (whichever is greater)
• Surviving spouse, no children: Spouse inherits entire estate
• Children, no spouse: Children inherit equally
• No spouse or children: Property goes to parents, then siblings, then more distant relatives

How Long Does Probate Take in Tennessee?

Tennessee probate typically takes 6 to 12 months for straightforward estates. Complex or contested estates can take significantly longer.

Key Timeframes in Tennessee Probate

• Opening probate: File the will and petition with the probate court (can be done shortly after death)
• Executor appointment: Court issues Letters Testamentary within days to weeks of filing
• Asset inventory: Executor must file an inventory of estate assets within 60 days of appointment
• Creditor claims period: Creditors have 4 months from publication of Notice to Creditors to file claims (up to 12 months in some cases)
• Estate closure: After creditor period ends and debts are paid, remaining assets can be distributed

Factors That Extend Probate

Several issues can push probate beyond the typical timeline:

• Contested wills: Disputes over validity can add months or years
• Complex estates: Multiple properties, business interests, or unusual assets take longer to value and distribute
• Multiple creditors: Resolving debts and claims takes time
• Out-of-state heirs: Coordination challenges slow the process
• Missing documents: Tracking down deeds, titles, or financial records
• Property in multiple states: May require ancillary probate in each state

Can You Sell an Inherited House Before Probate Is Complete?

Yes—with court approval, you can sell inherited property before probate closes. This is common when:

• Holding costs are draining the estate
• The property needs repairs the estate can't afford
• Heirs need cash to pay estate debts or taxes
• The property is vacant and at risk of vandalism or deterioration

Requirements for Selling During Probate

1. Court petition: The executor must petition the probate court for permission to sell
2. Property appraisal: An independent appraisal establishes fair market value
3. Heir notification: All heirs and interested parties must be notified
4. Creditor consideration: The court ensures the sale price is sufficient to pay estate debts
5. Court approval: A judge reviews and approves the sale terms

The process typically adds 30-60 days but can be worthwhile to stop the bleeding on holding costs or to take advantage of favorable market conditions.

Risks and Considerations

• Court delays: Getting approval takes time and isn't guaranteed
• Price restrictions: Courts may require sale at or above appraised value
• Heir disputes: If heirs disagree about selling, the court may deny the petition

Understanding Capital Gains Tax on Inherited Property in Tennessee

Here's where inheritance gets more favorable than you might expect. The stepped-up basis rule can eliminate most or all of your capital gains tax liability.

What Is Stepped-Up Basis?

When you inherit property, your "cost basis" (the value used to calculate gains) is "stepped up" to the fair market value at the date of death—not what the deceased originally paid.

Example:

• Your parent bought a house in 1990 for $80,000
• At their death in 2025, the house is worth $350,000
• Your stepped-up basis is $350,000 (not $80,000)
• If you sell for $350,000, your capital gain is $0
• If you sell for $370,000, your capital gain is only $20,000

Without stepped-up basis, you'd owe capital gains on $270,000 of appreciation. This rule is one of the most powerful tax benefits in the U.S. tax code for inherited property.

Tennessee Tax Advantage

Tennessee has no state income tax and no state capital gains tax. Any capital gains tax you owe is federal only:

• 0% if your income is below ~$47,000 (single) or ~$94,000 (married filing jointly)
• 15% for most taxpayers
• 20% for high earners (income above ~$518,000 single / ~$583,000 married)

How to Minimize Capital Gains

• Sell quickly: The sooner you sell after inheriting, the less time for appreciation (and taxable gain)
• 1031 exchange: If you're buying another investment property, you can defer gains through a like-kind exchange
• Primary residence exclusion: If you move into the inherited home and live there 2+ years, you can exclude up to $250,000 ($500,000 married) of gains
• Get a professional appraisal: Document the stepped-up basis at date of death in case of IRS questions

What If Multiple Heirs Inherit the Property?

When multiple siblings or family members inherit together, things get complicated. Each heir typically receives an undivided interest in the entire property—meaning everyone owns a piece of everything.

All Heirs Must Agree to Sell

Under Tennessee law, all co-owners must consent to sell the entire property. One heir cannot sell the whole house without the others' agreement.

Options When Heirs Disagree

• Buyout: One heir purchases the others' shares at fair market value
• Mediation: A neutral third party helps heirs reach agreement
• Partition action: Any heir can petition the court to force a sale, with proceeds divided among owners

Partition Actions in Tennessee

If heirs can't agree, Tennessee law allows any co-owner to file a partition action. The court can order:

• Partition in kind: Physically divide the property (rare for single homes)
• Partition by sale: Force the property to be sold, with proceeds distributed to heirs

Partition actions are expensive and time-consuming. They typically take 6-12 months and involve attorney fees, court costs, and often a court-appointed sale that may net less than a private sale.

Documents You Need to Sell an Inherited House in Tennessee

Gather these documents before listing or accepting offers:

• Death certificate: Certified copy (you'll need multiple)
• Letters testamentary or letters of administration: Proves you have legal authority to act for the estate
• The will: If one exists
• Property deed: Shows current ownership
• Title records: From the county Register of Deeds
• Property tax records: Shows taxes are current (or what's owed)
• Mortgage statements: If there's an existing mortgage
• HOA documents: If applicable
• Tennessee Property Disclosure Form: Required even for inherited properties (with some exemptions)

Tennessee Disclosure Requirements

Under the Tennessee Residential Property Disclosure Act, sellers must disclose known material defects. This applies to inherited properties, though exemptions may apply if:

• The property is sold at public auction
• The sale is court-ordered (some probate sales)
• The seller never occupied the property

When in doubt, disclose. Tennessee courts have awarded damages to buyers who discovered undisclosed defects after closing.

Your Options for Selling an Inherited House

You have several paths to sell inherited property in Tennessee. Each has tradeoffs between price, speed, and effort.

Option 1: Traditional Sale with a Real Estate Agent

Best for: Properties in good condition when you have time to wait

Pros:

• Potentially highest sale price
• Agent handles marketing and negotiations
• Access to MLS and broad buyer pool

Cons:

• Timeline: 101+ days average in Tennessee (see our Tennessee timeline guide)
• Commissions: 5-6% of sale price ($15,000-$18,000 on a $300,000 home)
• Repairs needed: Most buyers want move-in ready
• Showings: Strangers walking through, staging, keeping the home "show ready"
• Uncertainty: Deals fall through, buyers get cold feet

Option 2: For Sale By Owner (FSBO)

Best for: Experienced sellers willing to do the work

Pros:

• Save listing agent commission (2.5-3%)
• Full control over the process

Cons:

• Limited buyer exposure
• You handle all marketing, showings, and paperwork
• Often still pay 2.5-3% to buyer's agent
• FSBO homes typically sell for less than agent-listed homes
• Legal risks if you make mistakes with disclosures or contracts

Option 3: Single Cash Buyer ("We Buy Houses" Companies)

Best for: When you need to sell fast and don't want to compare options

Pros:

• Fast closing (often 7-14 days)
• Buy as-is, no repairs needed
• No commissions or fees
• Certainty—cash doesn't fall through

Cons:

• Single lowball offer: Typically 50-70% of market value
• No competition means no incentive to offer more
• Some companies are predatory—verify legitimacy

Option 4: Cash Offer Marketplace (Propcash)

Best for: Speed + fair price through competition

Pros:

• Fast closing (7-14 days)
• Buy as-is, no repairs
• No commissions or fees
• Multiple competing offers drive up price (typically 10-20% higher than single-buyer offers)
• Transparent process—see all offers and choose the best terms

Cons:

• Still below full retail price (but significantly better than single-buyer lowball)

Why Competing Cash Offers Beat Single-Buyer "We Buy Houses" Companies

The math is simple: when one buyer knows they're your only option, they have no incentive to offer fair value.

The Single-Buyer Problem

Traditional "We Buy Houses" companies make their profit by buying low. Their business model depends on getting properties at 50-70% of market value. When you call just one company, they know:

• You need to sell quickly
• You probably won't shop around
• They can offer whatever they want—you have no comparison

How Competition Changes the Dynamic

When multiple investors compete for your property:

• Each knows others are bidding: Creates urgency to offer competitively
• Market forces work in your favor: The auction effect drives prices up
• You see the range: Multiple offers show you what the market will actually pay
• Better terms, not just price: Investors compete on closing timeline, earnest money, and flexibility too

Real Impact on Inherited Property Sales

For inherited properties specifically, competing offers solve several problems:

• Multiple heirs can agree: Objective numbers remove emotion from the decision
• No repair arguments: All cash buyers purchase as-is
• Fast distribution: Quick closing means faster proceeds to split
• Out-of-state heirs: No need to travel for showings or repairs

For more on this topic, see our guide: Why Competing Offers Beat "We Buy Houses" Companies.

Frequently Asked Questions

Do I have to pay taxes on an inherited house in Tennessee?

Tennessee has no state inheritance tax or estate tax. You won't owe federal estate tax unless the estate exceeds $15 million (2026 threshold). However, you may owe federal capital gains tax if the property appreciates after you inherit it. Thanks to the stepped-up basis rule, you only pay tax on appreciation that occurs after the date of death—not on gains that accumulated during the deceased's lifetime.

How long do I have to sell an inherited house in Tennessee?

There's no legal deadline to sell an inherited house in Tennessee. However, holding costs add up quickly—property taxes, insurance, utilities, and maintenance can cost thousands per month. For tax purposes, selling sooner may help you avoid capital gains if the property appreciates. Many heirs choose to sell within 6-12 months of inheriting.

Can I sell an inherited house as-is in Tennessee?

Yes, you can sell an inherited house as-is in Tennessee. Cash buyers and investors regularly purchase inherited properties in any condition. You're still required to disclose known material defects under Tennessee's Residential Property Disclosure Act, but you don't have to make repairs. Selling as-is is especially common for inherited properties where heirs live out of state or don't want to manage renovations.

What if the inherited house has a mortgage?

If the inherited house has a mortgage, you have several options: continue making payments and keep the property, refinance into your own name, or sell the property and use proceeds to pay off the remaining balance. Federal law (Garn-St. Germain Act) prevents lenders from calling the loan due simply because of inheritance. When you sell, the mortgage is paid off at closing from the sale proceeds.

What if there's a lien on the inherited property?

Liens transfer with the property when you inherit it. Common liens include unpaid property taxes, contractor liens, or court judgments. These must be resolved before or at closing. A title search will reveal any liens, and they're typically paid from sale proceeds. If liens exceed the property's value, consult with a probate attorney about your options.

Moving Forward: Your Next Steps

Selling an inherited house in Tennessee doesn't have to be overwhelming. Here's a simple path forward:

1. Determine probate status: Is the property already through probate, or do you need court approval to sell?
2. Gather documents: Death certificate, letters testamentary, deed, and tax records
3. Understand your basis: Get an appraisal at date of death to establish stepped-up basis
4. Coordinate with co-heirs: If applicable, get everyone on the same page about selling
5. Explore your options: Get cash offers to understand what the market will pay today

Whatever path you choose, remember: you have options. Whether you want maximum price (and can wait 4-6 months) or prefer speed and certainty (and can close in 2 weeks), there's a solution that fits your situation.

Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Probate laws, tax rules, and real estate regulations vary by situation. Consult with a Tennessee probate attorney, tax professional, or real estate attorney for advice specific to your circumstances.