Houston Tax Attorney
In short, yes. You pay taxes on any gain resulting from the sale. With an inherited property, you subtract the fair market value at the time of inheritance against the sale price to determine gain/loss.
You didn’t mention how long you’ve owned it, if you lived in the house after inheriting it, or if it was rented after you inherited it. All of these things would have a big impact on the tax consequences of the sale. If you lived in the house for at least two years after inheriting it, you might be able to exclude a portion of the gain under IRC 121. Otherwise, the property can be treated as an investment, and you might be able to deduct a capital loss on the sale (if there’s a loss). The stepped up basis would apply in either situation.