Disclaimer: General educational research only — not legal, tax or investment advice. The numbers on this page are illustrations built from statewide medians, not a calculation for your home. Talk to an estate planning attorney or tax professional about your situation.
Estate Planning Data & Research → Step-Up in Basis on Homes
Many parents think about “giving the house to the kids now” to keep things simple. The tax rules treat that very differently from leaving the house at death. A gifted home generally keeps the giver’s original cost for tax purposes. An inherited home generally gets a new cost equal to its market value on the date of death. That reset is called the step-up in basis, and on a home that has gone up in value for decades, it can be the difference between a large taxable gain and almost none.
We used federal home price data to estimate how large that gain could be for a typical owner-occupied home in each state. These are illustrations of scale, not predictions for any family.
How you pass on a house is a choice about taxes, control and probate. If you’re deciding between a will and a trust to handle it, compare them here.
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Cite this page URL when reusing findings. Not a substitute for official sources or professional advice.
Key findings
- Home prices nationally are about 2.9 times their 2000 level (FHFA House Price Index, 2024 average vs. 2000 average). Since 2010 they’ve roughly doubled (2.1×), and since 2020 they’re up about 47%.
- For a typical U.S. home ($360,600 median value in 2024), the gain since 2000 is about $234,381. If it’s inherited, the heir’s starting basis is the value at death, so the gain from the original purchase generally doesn’t show up as taxable income. If it was gifted, the heir generally takes over the giver’s original cost and the whole gain can be taxable on a later sale.
- The gap is largest in Hawaii (about $651,216), District of Columbia ($559,924) and California ($540,757). It’s smallest in West Virginia ($93,319), Mississippi ($100,885) and Louisiana ($123,088).
- Even a home bought in 2020 carries a sizable gap in some places: $253,277 in Hawaii and about $212,181 in California.
- In 18 states and D.C. the typical gain since 2000 is above $250,000 (the amount a single owner can generally exclude when selling a main home), and in 2 states and D.C. it is above $500,000 (the amount for married couples filing jointly). Rules for that exclusion are separate from the step-up, and they depend on who owns and lives in the home.
How the two paths differ
| Inherited at death | Gifted during life | |
|---|---|---|
| Heir’s starting basis for tax | Generally the home’s fair market value at the date of death | Generally the giver’s adjusted basis (what they paid, plus improvements) |
| Gain if the heir sells right away | Usually small or none | Sale price minus the giver’s old basis |
| Gift tax return | Not applicable | Form 709 is generally required if the gift exceeds the annual exclusion ($19,000 per recipient for 2026); a typical home does |
| Federal estate tax | The home counts toward the estate, but the federal exemption is $15,000,000 per person for 2026 | The gift uses part of the lifetime exemption |
Sources for these rules are listed in the methodology below. Two special cases are worth knowing: if a gifted home is worth less than the giver’s basis, there are separate rules for figuring a loss, and some states with community property rules treat the surviving spouse’s half differently at the first death. Ask a professional about both.
What we estimated
For each state we took the median value of owner-occupied homes from the Census Bureau (2024), then estimated what the home would have cost if it had been bought in 2000, 2010 or 2020 using the state’s FHFA price index. The “gain” is the difference. The last column applies a 15% federal long-term capital gains rate to the 2000 gain for scale, because 15% is the rate that applies to most taxpayers. Some sellers pay 0%, and higher earners pay 20% and may owe an additional 3.8% net investment income tax. State income taxes aren’t included.
| State | Median home value (2024) | Gain if bought in 2000 | Gain if bought in 2020 | |
|---|---|---|---|---|
| Largest | Hawaii | $875,900 | $651,216 | $253,277 |
| Largest | District of Columbia | $733,400 | $559,924 | $82,364 |
| Largest | California | $759,500 | $540,757 | $212,181 |
| Largest | Washington | $602,200 | $435,522 | $179,941 |
| Largest | Massachusetts | $607,400 | $398,785 | $188,163 |
| Smallest | West Virginia | $170,800 | $93,319 | $45,978 |
| Smallest | Mississippi | $186,500 | $100,885 | $52,273 |
| Smallest | Louisiana | $223,200 | $123,088 | $38,684 |
| Smallest | Iowa | $227,300 | $127,815 | $62,447 |
| Smallest | Ohio | $239,800 | $128,417 | $78,129 |
Why this is illustrative, not a tax estimate
- It uses medians, not your house. Your home’s value and your purchase date will differ.
- Improvements raise basis. A new roof, addition or kitchen remodel adds to the original cost. This reduces your real gain, so the estimates here run high for homes that were renovated.
- The main-home exclusion can shield a gain. A homeowner selling a primary residence they’ve owned and lived in can often exclude up to $250,000 of gain ($500,000 for married couples filing jointly). The exclusion has ownership-and-use tests (generally two of the last five years), so a child who is given a house would have to meet them on their own. That’s one more reason the gift decision can’t be made from a table. See IRS Publication 523.
- Gifting has non-tax effects. A gift generally can’t be undone, exposes the home to the recipient’s creditors and divorce, and can affect Medicaid eligibility. See Medicaid home equity limits by state. Many families use a lady bird deed or a transfer-on-death deed or a living trust instead, which in many cases keep the step-up. Whether yours will depends on how the deed and trust are written and on your state’s law.
- Price index, not appraisals. The FHFA All-Transactions index estimates price changes from sales prices and appraisal data. It isn’t a record of every home sale, and it can differ from other price indexes.
All states
All dollar figures are rounded. The 2000, 2010 and 2020 columns use annual averages of the FHFA index.
| State | Median home value (2024) | Price index, 2024 vs. 2000 | Gain if bought in 2000 | Gain if bought in 2010 | Gain if bought in 2020 | Federal tax at 15% on the 2000 gain |
|---|---|---|---|---|---|---|
| Alabama | $233,300 | 2.42× | $136,922 | $102,212 | $74,240 | $20,538 |
| Alaska | $376,500 | 2.62× | $232,851 | $145,041 | $95,994 | $34,928 |
| Arizona | $426,000 | 3.50× | $304,397 | $268,537 | $152,349 | $45,660 |
| Arkansas | $215,600 | 2.50× | $129,310 | $99,243 | $71,378 | $19,396 |
| California | $759,500 | 3.47× | $540,757 | $432,063 | $212,181 | $81,114 |
| Colorado | $574,600 | 3.12× | $390,364 | $342,754 | $161,229 | $58,555 |
| Connecticut | $396,900 | 2.41× | $231,920 | $149,785 | $138,871 | $34,788 |
| Delaware | $371,600 | 2.70× | $234,215 | $148,542 | $118,386 | $35,132 |
| District of Columbia | $733,400 | 4.23× | $559,924 | $337,481 | $82,364 | $83,989 |
| Florida | $396,900 | 3.91× | $295,494 | $252,755 | $152,546 | $44,324 |
| Georgia | $343,300 | 2.68× | $214,999 | $189,663 | $125,022 | $32,250 |
| Hawaii | $875,900 | 3.90× | $651,216 | $442,366 | $253,277 | $97,682 |
| Idaho | $446,400 | 3.90× | $332,074 | $283,618 | $160,093 | $49,811 |
| Illinois | $280,700 | 2.03× | $142,391 | $104,458 | $80,222 | $21,359 |
| Indiana | $243,500 | 2.34× | $139,560 | $122,333 | $80,031 | $20,934 |
| Iowa | $227,300 | 2.28× | $127,815 | $98,215 | $62,447 | $19,172 |
| Kansas | $238,700 | 2.47× | $141,944 | $113,630 | $74,302 | $21,292 |
| Kentucky | $226,000 | 2.44× | $133,525 | $106,828 | $71,062 | $20,029 |
| Louisiana | $223,200 | 2.23× | $123,088 | $73,943 | $38,684 | $18,463 |
| Maine | $341,900 | 3.38× | $240,779 | $181,118 | $132,787 | $36,117 |
| Maryland | $436,300 | 2.81× | $280,780 | $165,187 | $116,326 | $42,117 |
| Massachusetts | $607,400 | 2.91× | $398,785 | $305,164 | $188,163 | $59,818 |
| Michigan | $254,200 | 2.05× | $130,213 | $140,016 | $80,582 | $19,532 |
| Minnesota | $344,600 | 2.45× | $203,997 | $157,873 | $88,535 | $30,600 |
| Mississippi | $186,500 | 2.18× | $100,885 | $72,909 | $52,273 | $15,133 |
| Missouri | $254,400 | 2.49× | $152,202 | $121,097 | $81,904 | $22,830 |
| Montana | $425,400 | 3.81× | $313,682 | $239,468 | $160,598 | $47,052 |
| Nebraska | $263,100 | 2.55× | $159,778 | $135,612 | $81,876 | $23,967 |
| Nevada | $455,500 | 3.15× | $310,714 | $293,269 | $142,751 | $46,607 |
| New Hampshire | $458,800 | 3.15× | $313,037 | $243,236 | $170,710 | $46,956 |
| New Jersey | $496,000 | 2.98× | $329,411 | $217,253 | $176,430 | $49,412 |
| New Mexico | $279,900 | 2.63× | $173,465 | $120,278 | $89,867 | $26,020 |
| New York | $449,800 | 3.02× | $301,076 | $205,435 | $139,603 | $45,161 |
| North Carolina | $333,000 | 2.81× | $214,514 | $176,562 | $124,755 | $32,177 |
| North Dakota | $266,100 | 3.04× | $178,490 | $127,729 | $59,064 | $26,774 |
| Ohio | $239,800 | 2.15× | $128,417 | $116,439 | $78,129 | $19,263 |
| Oklahoma | $222,100 | 2.56× | $135,423 | $101,780 | $67,313 | $20,313 |
| Oregon | $497,500 | 3.28× | $345,688 | $271,701 | $129,832 | $51,853 |
| Pennsylvania | $277,600 | 2.76× | $177,190 | $120,237 | $83,618 | $26,578 |
| Rhode Island | $455,700 | 3.30× | $317,714 | $231,115 | $166,678 | $47,657 |
| South Carolina | $299,500 | 2.84× | $194,054 | $157,239 | $110,389 | $29,108 |
| South Dakota | $289,600 | 3.01× | $193,510 | $151,499 | $93,440 | $29,026 |
| Tennessee | $332,600 | 3.09× | $225,007 | $189,894 | $123,988 | $33,751 |
| Texas | $313,200 | 3.16× | $214,213 | $177,883 | $96,871 | $32,132 |
| Utah | $545,200 | 3.43× | $386,094 | $330,977 | $184,391 | $57,914 |
| Vermont | $352,800 | 3.23× | $243,547 | $165,589 | $132,937 | $36,532 |
| Virginia | $403,500 | 3.05× | $271,214 | $177,838 | $125,599 | $40,682 |
| Washington | $602,200 | 3.61× | $435,522 | $350,620 | $179,941 | $65,328 |
| West Virginia | $170,800 | 2.20× | $93,319 | $64,495 | $45,978 | $13,998 |
| Wisconsin | $294,700 | 2.50× | $176,675 | $140,302 | $99,207 | $26,501 |
| Wyoming | $339,500 | 3.14× | $231,270 | $150,374 | $97,883 | $34,690 |
| United States | $360,600 | 2.86× | $234,381 | $186,829 | $115,080 | $35,157 |
What this means if you’re planning
- Ask before you deed. A quick conversation with an estate planning attorney before a home is gifted can prevent a large, avoidable tax bill for a child.
- Know the original cost. Keep the closing statement and records of major improvements; the heir or the executor will need them.
- Think about the whole plan. The home is often the largest asset. See inherited home values by state and the estate planning checklist.
- Federal estate tax is rarely the issue. The 2026 federal exemption is $15 million per person, so most families’ homes won’t be taxed at death. See the federal estate tax exemption and state estate taxes for the states with lower thresholds.
Related: Silver tsunami homes by state · Deed theft watch · Heirs’ property and disaster aid
Income tax is only one cost of inheriting a home. For property tax, see property tax after inheritance.
Methodology
Home values. U.S. Census Bureau, American Community Survey 2024 1-year estimates, table B25077 (median value of owner-occupied housing units), states, D.C. and the U.S. Puerto Rico is excluded.
Price index. Federal Housing Finance Agency, All-Transactions House Price Index (quarterly, not seasonally adjusted, index Q1 1980 = 100; estimated from sales prices and appraisal data) for each state and the U.S., via the Federal Reserve Bank of St. Louis FRED (series [ST]STHPI and USSTHPI). Latest observation: Q2 2026.
Calculation. Gain if bought in year Y = median value 2024 × (1 − average index in Y ÷ average index in 2024). This assumes the median home appreciated like the state index and that nothing was added to basis. We stop at 2024 so the home value and the index cover the same period. Prices have continued to move since, and the index for Q2 2026 is about 7% above its 2024 average nationally.
Rules. IRS Publication 551 (Basis of Assets, Rev. 12-2025): inherited property and property received as a gift; IRS “What’s new — Estate and gift tax” (2026 basic exclusion $15,000,000; 2026 annual exclusion $19,000); IRS Topic 409 (capital gains rates); 26 U.S.C. §§ 1014 (inherited property, including property in a revocable trust at death) and 1015 (gifts); IRS Publication 523 (selling your home).
What this doesn’t measure. Actual home sales, anyone’s real basis, state taxes, or how many homes are gifted versus inherited.
Frequently asked questions
What is a step-up in basis?
When someone inherits an asset, its tax cost basis generally resets to its fair market value on the date of death. If the heir sells soon after, there is usually little or no taxable gain.
If I gift my house to my child, what is their basis?
Generally your adjusted basis, meaning what you paid plus improvements. They’d owe capital gains tax on the difference if they later sell for more.
Is the gift taxed?
A gift may require a gift tax return (Form 709) when it’s larger than the annual exclusion, which is $19,000 per recipient for 2026. A return is usually not the same as tax owed: the amount counts against a lifetime exemption of $15,000,000 for 2026.
Does a living trust keep the step-up?
Assets in a revocable living trust generally get the step-up at the grantor’s death, because they’re still included in the grantor’s estate for tax purposes. An irrevocable trust depends on how it’s written.
Is this tax advice?
No. These are statewide medians and an illustrative method. A tax professional can use your actual records.
Sources
U.S. government public-domain data and official agency pages only.
Data (pulled 2026-10-09)
- FHFA All-Transactions House Price Index (quarterly, NSA, 1980:Q1=100) for 50 states, D.C. and U.S. via FRED, series {ST}STHPI and USSTHPI, observations 1999–Q2 2026: https://fred.stlouisfed.org/ (e.g. https://fred.stlouisfed.org/series/MESTHPI); FHFA source: https://www.fhfa.gov/data/hpi .
- U.S. Census Bureau ACS 2024 1-year, B25077 median value of owner-occupied housing units: https://api.census.gov/data/2024/acs/acs1 .
Rules (checked 2026-10-09)
- IRS Publication 551, Basis of Assets (Rev. 12-2025): Property Received as a Gift; Inherited Property: https://www.irs.gov/pub/irs-pdf/p551.pdf
- IRS, What’s new — Estate and gift tax (2026 basic exclusion amount $15,000,000; annual exclusion $19,000 for 2025 and 2026; page reviewed Jul 23, 2026): https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax
- IRS Topic no. 409, Capital gains and losses (15%/20% rates; 0% thresholds; page reviewed Sep 24, 2026): https://www.irs.gov/taxtopics/tc409
- 26 U.S.C. § 1014 https://www.law.cornell.edu/uscode/text/26/1014 ; § 1015 https://www.law.cornell.edu/uscode/text/26/1015
- IRS Publication 523, Selling Your Home: https://www.irs.gov/publications/p523
Cite this data
Family Estate Guide, “Gift the House or Leave It? How Much Home Gain Is at Stake in Each State,” October 2026. https://familyestateguide.com/estate-planning-data/step-up-in-basis-home-gains/
You’re welcome to reuse the table with a link back to this page. FHFA and Census data are public.
Published October 9, 2026 by Family Estate Guide. Data vintage: FHFA HPI through Q2 2026; Census ACS 2024 1-year estimates. Tax rules for 2026 checked Oct. 9, 2026. Editorial standards.