When you've inherited a house and later sell it, you could be looking at a taxable gain or loss. At the time of sale, you will generally compare the house's Fair Market Value on the date of death to what you get for it, less selling costs. During the time you hold the house, you can deduct property taxes. Here's a rather aggressive opinion from TaxMama, about what to do with some of the other costs related to maintaining the house: Inherited House