Do I Have to Pay Inheritance Tax on a House in Maryland?

Do You Have to Pay Inheritance Tax on a Maryland House?

Under Maryland's general inheritance-tax rules, spouses, children, grandchildren, parents, grandparents, and siblings are exempt.

Nieces, nephews, cousins, and unrelated beneficiaries generally face a 10% inheritance tax on the taxable value of property they receive.

But every situation is different.

The type of property, how ownership transfers, the date of death, and other factors may affect the result.

Before making financial decisions, ask a qualified tax professional whether Maryland inheritance tax applies to your specific inheritance.

What Is Maryland's Inheritance Tax?

Maryland inheritance tax is generally imposed when certain beneficiaries receive property from someone who has died.

Unlike Maryland's estate tax, which generally applies to larger estates, inheritance tax is largely determined by the beneficiary's relationship to the deceased.

Maryland's general inheritance-tax rate for non-exempt beneficiaries is 10%.

The tax may apply to property received through:

• A will
• Maryland's inheritance laws when someone dies without a will
• Certain trusts
• Certain jointly owned assets
• Certain transfers outside probate

The Maryland Register of Wills determines and collects inheritance tax.

Official Source: Maryland Register of Wills: Inheritance Tax

Who Is Exempt From Maryland Inheritance Tax?

Maryland provides exemptions for many close family members.

Other exemptions may apply, including certain domestic partners, spouses of children, and qualifying charitable organizations.

These are general rules, not a determination of an individual's tax liability.

Questions to Ask Your Tax Professional

1. Does my relationship to the deceased qualify for an exemption?
2. Does the exemption apply to everything I inherited?
3. Are there special rules affecting this property?
4. Does the date of death change the applicable tax treatment?

How Much Inheritance Tax Could Apply to a Maryland House?

The amount generally depends on the property's taxable value and whether the beneficiary qualifies for an exemption.

Consider this hypothetical example.

Example: A Nephew Inherits a $600,000 Home

What if the House Has a Mortgage?

The mortgage balance and other circumstances may affect the taxable value used in an inheritance-tax calculation.

For example, a house with a market value of $600,000 and an outstanding mortgage of $200,000 raises a different set of questions than a house owned free and clear.

Do not assume that the taxable value automatically equals either the full market value or the owner's equity.

Ask your attorney or CPA:

• How is the property's taxable value established?
• Which debts or deductions are allowed?
• Is an appraisal required?
• Who determines the final amount owed?
• When must any tax be paid?

Important: The examples above are hypothetical. Only a qualified professional reviewing the specific estate can determine the applicable tax treatment.

Is Maryland Inheritance Tax Different From Estate Tax?

Yes. Maryland has two separate taxes that work differently.

Maryland Estate Tax

For deaths occurring in 2026, Maryland generally provides:

• A $5 million estate tax exemption.
• A maximum estate tax rate of 16%.

The estate tax concerns the taxable value of the estate and applicable Maryland estate tax rules.

Maryland Inheritance Tax

Maryland's inheritance tax generally:

• Applies at a 10% rate to non-exempt beneficiaries.
• Depends largely on the beneficiary's relationship to the deceased.
• May apply even when the total estate is below $5 million.

Can Both Taxes Apply?

Potentially, yes.

Maryland has rules that allow inheritance tax paid to reduce the Maryland estate tax liability.

The two amounts should not simply be added together without reviewing the applicable tax credit.

For a more detailed side-by-side comparison, read our Maryland estate tax vs. inheritance tax guide.

Questions to Ask Your CPA:

1. Could the estate be subject to Maryland estate tax?
2. Could my inheritance also be subject to inheritance tax?
3. How do the two taxes interact?
4. Are any tax filings required?

Official Source: Maryland Comptroller: Estate and Inheritance Tax FAQs

Does Selling an Inherited Maryland House Create an Inheritance Tax?

The sale itself is not necessarily what creates an inheritance-tax obligation.

Maryland inheritance tax generally relates to receiving taxable property from someone who has died.

The timing and payment process depend on how the property transfers.

For example, probate property and property passing outside probate may have different reporting and payment procedures.

Selling the property later may raise separate income tax questions, including possible capital gains tax.

These are different taxes with different rules.

Before listing the home, consider asking your CPA:

• Does inheritance tax apply before or after the sale?
• Could selling the house create a capital gains tax obligation?
• What records should I keep?
• How will the property's tax basis be determined?
• Are there filing requirements or deadlines?

Your tax advisor can help you understand how these questions apply to your situation.

Does Maryland's New Transfer-on-Death Deed Avoid Inheritance Tax?

No. A transfer-on-death deed does not automatically eliminate Maryland inheritance tax.

Maryland's new transfer-on-death deed law became effective October 1, 2026.

The law allows qualifying property owners to name beneficiaries who receive real estate after the owner's death without the usual probate transfer process.

However, the law specifically warns that beneficiaries may still owe inheritance tax.

For example, a homeowner naming a nephew as beneficiary does not automatically make the transfer tax-free.

The law also includes requirements for preparing, acknowledging, recording, and revoking these deeds.

Questions to Ask Your Estate Planning Attorney

• Does a transfer-on-death deed affect my inheritance-tax exposure?
• Is the deed legally valid?
• Are there mortgages, liens, or creditor issues?
• Does the property transfer require additional documentation?
• Would a different estate planning arrangement be more appropriate?

Official Source: Maryland Transfer-on-Death Deed Law, HB 738

Who Is Responsible for Paying Maryland Inheritance Tax?

Responsibility can depend on the terms of the will, how the property transfers, and the estate's circumstances.

Some wills direct the estate to pay inheritance taxes.

Other situations may place payment responsibility on the beneficiary.

For certain non-probate assets, the Register of Wills assesses the tax and issues a bill to the responsible party.

Do not assume taxes will automatically be deducted from the proceeds when an inherited house is sold.

Ask the estate attorney:

1. Who is responsible for any inheritance tax?
2. Does the will contain a tax-payment provision?
3. When is payment required?
4. Can the tax be addressed during the property sale?
5. What documentation will be needed?

What Happens if Maryland Inheritance Tax Is Not Paid?

Maryland provides penalties, interest, and collection procedures for unpaid inheritance taxes.

For certain non-probate inheritance-tax bills, payment delays beyond 30 days can result in a 10% penalty and interest.

Additional delays can lead to further collection action.

The Maryland Register of Wills provides information about these procedures.

If you receive a tax notice or assessment, have your attorney or tax advisor review it promptly.

Frequently Asked Questions

Do I Pay Maryland Inheritance Tax if I Live in Another State?

Living outside Maryland does not automatically exempt someone from Maryland inheritance tax on property located in Maryland.

Ask your tax professional which state's rules apply and whether additional filings are required.

Does a Grandchild Pay Inheritance Tax on a Maryland House?

Grandchildren generally qualify for Maryland's inheritance-tax exemption.

A qualified tax professional can confirm whether the exemption applies to the specific transfer.

Can I Avoid Inheritance Tax by Selling the House Immediately?

Selling quickly does not automatically eliminate inheritance-tax obligations.

Discuss the timing and tax treatment with the estate's attorney and CPA.

Does Putting a House in a Trust Avoid Maryland Inheritance Tax?

Not necessarily.

Certain transfers through trusts may still be subject to inheritance tax.

Ask a Maryland estate planning attorney to review the trust and beneficiary arrangements.

Can a Maryland Executor Sell a House Before Probate Is Finished?

A properly authorized personal representative may be able to sell estate real estate while probate administration continues.

However, the legal requirements depend on the circumstances.

Ask the estate attorney to confirm who has authority to sell and whether any court approval or other steps are required.

10 Questions to Ask Before Selling an Inherited Maryland House

Before making decisions about inherited property, consider discussing these questions with your attorney or CPA:

1. Does Maryland inheritance tax apply to my inheritance?
2. Do I qualify for an exemption?
3. How is the property's taxable value determined?
4. Does the mortgage affect the tax calculation?
5. Could estate tax, inheritance tax, or capital gains tax apply?
6. Who is legally responsible for paying any taxes?
7. Who has the legal authority to sell the property?
8. Are there probate requirements or deadlines affecting the sale?
9. Does a trust or transfer-on-death deed change the situation?
10. What documents should I obtain before listing the property?

These questions can help you prepare for a productive conversation with your professional advisors.

Once the legal and tax questions are addressed, a Realtor experienced with inherited property can help you understand your selling options.

Need Help Selling an Inherited Maryland Home?

I am Marc Cormier with Berkshire Hathaway HomeServices PenFed Realty.

For 27+ years, I have helped families, executors, and bankruptcy trustees handle real estate transactions, including difficult property sales.

My role is to help you evaluate the real estate side of the process.

That may include:

• Determining the home's current market value
• Reviewing its condition
• Comparing an as-is sale with making improvements
• Coordinating cleanout and property preparation
• Professional staging
• Marketing and negotiation
• Working alongside your estate attorney during the sale

You may not need to renovate.

You may not need to clean everything out.

And selling as-is may not bring the strongest result.

The right plan depends on the property, its condition, and your goals.

Let's discuss the property's value, condition, and selling options.