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New Hampshire Step-Up in Basis Explained
Support GuideNew Hampshire16 min read

New Hampshire Step-Up in Basis Explained

New Hampshire adds no tax when you inherit, so IRC Section 1014 does the work. Here is how basis resets to date-of-death value, and how to prove it.

By Settled Editorial

When you inherit property in New Hampshire, its cost basis resets to the fair market value on the owner's date of death. That reset comes from Internal Revenue Code Section 1014, and it wipes out the capital gains tax on everything the asset gained during the owner's lifetime. You owe tax only on growth after the death, and only when you sell.

New Hampshire adds nothing on top of that. The state repealed its inheritance tax, its estate tax stopped operating on its own terms, and its income tax chapter is now repealed in full, so no New Hampshire tax reaches the gain. The whole tax answer is federal. The New Hampshire part of the job is proving the date-of-death number, and this state makes that harder than most, because the document that usually records it is optional here.

What The Step-Up Does To Your Tax Bill

Basis is what the tax system treats as your cost in an asset. When you sell, you owe capital gains tax on the sale price minus that basis. The step-up changes the starting number.

The problem it solves

Say your father bought a house in Concord in 1991 for $84,000. At his death in 2026 it is worth $412,000. If he had signed the deed over to you while he was alive, you would take his $84,000 cost, called a carryover basis, and a sale at $412,000 would show a $328,000 gain.

Because you inherited the house instead, your basis steps up to $412,000. Sell at $412,000 and your gain is zero. Sell two years later for $438,000 and you report a $26,000 gain rather than $354,000.

Where the rule comes from

The rule is federal, and no New Hampshire statute sets a basis. IRC Section 1014 gives property acquired from a decedent a basis equal to its fair market value at the date of death. That reach is wide. It covers property that passes through New Hampshire probate, a funded revocable trust, a recorded transfer on death deed under RSA 563-D, joint ownership with a right of survivorship, and a beneficiary form on an account. Skipping probate does not cost anyone the step-up, which is worth knowing before you read how to keep assets out of probate here.

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New Hampshire Levies No Tax Of Its Own On The Inheritance

Three chapters of Title V settle this, and each got there a different way. The distinction matters if you are reading older articles, because the sentence "New Hampshire repealed its estate tax" is wrong.

  • No inheritance tax. RSA 86, "Taxation of Legacies and Successions", prints as "Chapter 86 Repealed", with the note "[Repealed 2002, 232:14, II, eff. Jan. 1, 2003.]".
  • No estate tax, but not by repeal. RSA 87 is still printed in full. RSA 87:9, titled "Chapter Void, When", makes the chapter "void and of no effect in respect to the estates of persons who die subsequent to the effective date of the repeal" of the federal credit for state death taxes. The federal credit went away for deaths after 2004, so the chapter has produced no tax since.
  • No personal income tax. RSA 77, "Taxation of Incomes", prints as "Chapter 77 Repealed", with the note "[Repealed by 2021, 91:189, II, eff. Jan. 1, 2025.]". The gain you report to the IRS carries no matching New Hampshire bill.

One limit on that last point. Title V still carries a business profits tax at RSA 77-A and a business enterprise tax at RSA 77-E, so a gain realized inside a company that files in New Hampshire is a different question from a gain an individual heir reports. Ask a New Hampshire accountant if the inherited property sits in an operating entity. For the estate-level side of the same subject, our guide on why New Hampshire has no estate or inheritance tax covers the federal Form 706 threshold and what still shows up on the probate paperwork.

Proving The Date-Of-Death Value In New Hampshire

Here is the part that differs from neighbouring states, and the part that costs heirs money years later.

The inventory is where the number lives, when one gets filed

RSA 554:1 requires every administrator to file a "full, true, and itemized inventory" with the court "within 90 days after the date of appointment". The statute then says exactly what that document must carry: a detailed itemized list of all real and personal property, the fair market values "as of the decedent's date of death", and "how such value was determined, whether by appraisal, tax information, bank statement or other source."

Read that twice, because it is the best basis record a New Hampshire family will ever get for free. It is dated to the death, it is itemized, it is sworn under penalty of unsworn falsification, and it says where each figure came from. The 90 days runs from the appointment of the administrator, not from the death, which matches how New Hampshire measures the rest of the estate clocks. Our guide to the date-of-death inventory and the rest of an administrator's job walks through filing it.

Most simple New Hampshire estates never file one

This is the trap. RSA 553:32, waiver of administration, opens with the words "there shall be no requirement for an inventory of the estate, no requirement for a bond, and no requirement for an accounting for assets", and then lists six situations that qualify. Two of them describe the most ordinary family estate there is: a sole beneficiary named in the will who serves as administrator, and a sole heir in an intestate estate who serves as administrator. Add the cases where every beneficiary or heir consents, and a large share of New Hampshire estates run without an inventory.

New Hampshire also has no small estate affidavit, so a family cannot fall back on one of those for a value either. Our guide to waiver and summary administration explains which route an estate qualifies for.

The consequence for basis is direct. If the estate closes on a waiver, the court file holds no date-of-death value for the house, the brokerage account or the truck. Nobody will hand you the number later. Build the record yourself in the first few months.

An inventory value is not automatically an appraisal

Even when an inventory is filed, look at how the figure was reached. RSA 554:1, II says no appraiser is required to give an opinion of value, and it lets the judge appoint one only when the nature of the property, the size of the estate or some other cause makes it advisable. The same section expressly allows a value drawn from "tax information", meaning the town's assessed value.

An assessment is set for property tax purposes and often trails the market. Filing it as the inventory value satisfies the probate court. Using it as your basis on a later sale can invent a gain that never existed. Get a real number.

What to gather, by asset

  • Real estate. Order a date-of-death appraisal from a licensed New Hampshire appraiser. An appraiser can date the opinion retroactively, and it gets harder to support the further you get from the death.
  • Publicly traded stock. Average the high and low trading price on the date of death. If the death fell on a weekend or a holiday, average the nearest trading days on either side.
  • Bank and brokerage accounts. Ask for date-of-death statements. Most firms produce them on request and will not keep producing them forever.
  • A closely held business. Commission a professional valuation while the books and the people who kept them are still available.
  • Vehicles, art, jewelry, firearms. Get a written appraisal for anything worth appraising, and photograph the rest.

The alternate valuation date rarely applies

An administrator who files a federal estate tax return, Form 706, may elect the alternate valuation date under IRC Section 2032, which values the estate six months after death. That election exists only when a 706 is actually filed. With the federal exemption at $15,000,000 for 2026 deaths, almost no New Hampshire estate files one, so the date-of-death value is the number nearly every heir uses. Check the estate against that exclusion with the New Hampshire estate tax calculator before assuming a 706 is coming.

Add what you put in afterwards

Capital improvements you make after inheriting raise your basis. A new roof, an addition, a septic replacement or a kitchen remodel all count. Routine repairs do not, so track the two separately and keep receipts.

ItemAmount
Date-of-death value (your stepped-up basis)$412,000
New septic system+$23,000
Kitchen remodel+$31,000
Adjusted basis$466,000
Sale price$505,000
Capital gain you report$39,000

What Steps Up And What Does Not

Most capital assets reset:

  • Real estate, including homes, land, camps and rental property
  • Stocks, bonds, mutual funds and exchange-traded funds
  • An interest in a family business
  • Vehicles, boats, art, jewelry and other property worth appraising

Three categories sit outside the rule:

  • Retirement accounts. Traditional IRAs, 401(k) plans and similar tax-deferred accounts are income in respect of a decedent. Heirs pay ordinary income tax on withdrawals and the account gets no basis reset.
  • Property gifted during life. A lifetime gift carries the giver's basis to you. Giving the house away early is the single most expensive mistake in this area.
  • Assets that come back within a year. If you gave appreciated property to someone, they died within one year, and it returned to you, IRC Section 1014(e) denies the step-up.

Jointly Owned Property Steps Up By Half

New Hampshire is a common-law, separate-property state rather than a community property state. When a married couple owns an asset jointly, only the deceased spouse's share steps up at the first death. The survivor keeps the original cost on their own half. Couples in the nine community property states can reset an entire asset at the first death, and that treatment does not reach New Hampshire. The same half-and-half rule applies to any co-owned property held with a right of survivorship, whether the co-owner is a spouse, a sibling or a child.

A Transfer On Death Deed Keeps The Step-Up

New Hampshire got a real transfer on death deed on July 1, 2024, under RSA 563-D, the Uniform Real Property Transfer on Death Act. Families ask whether using one trades away the basis reset. It does not, and the statute shows why.

RSA 563-D:12 says that during the owner's life the deed does not affect any interest or right of the owner, including the right to sell or mortgage the property, and creates no legal or equitable interest in the beneficiary. RSA 563-D:13 then transfers the interest at death, and it applies to property "owned by the transferor at death". Owning the property at death is the condition IRC Section 1014 cares about. RSA 563-D:7 adds that the deed is nontestamentary, so the land skips probate while the basis still resets.

One warning belongs anywhere the deed comes up. RSA 563-D:9 makes a transfer on death deed void unless it meets the RSA 477:3 deed formalities, bears the title "Transfer on Death Deed", states that the transfer occurs at the owner's death, and is recorded before the owner dies and within 60 days following the date of execution, in full in the registry of deeds for each county where the land lies. Most transfer on death states ask only that the deed reach the registry before the death. New Hampshire adds the 60-day signing-to-recording window, and a deed that misses it is void, which sends the property back into the estate and changes who inherits. The New Hampshire transfer on death deed guide covers the form and the recording steps.

Capital Gains After You Sell

Inherited property is treated as long-term no matter how briefly you or the decedent held it, under IRC Section 1223. The lower long-term rates apply even on a sale the week you inherit.

Federal long-term capital gains fall into three brackets, 0%, 15% and 20%, based on your taxable income for the year, and the income thresholds move every year. A separate 3.8% net investment income tax can apply once modified adjusted gross income passes $200,000 for a single filer or $250,000 for a married couple filing jointly. Check the current figures with the IRS before you file.

New Hampshire charges you nothing on the gain. Broker commission, legal fees and closing costs reduce it further, so keep the settlement statement. Our guide to selling the inherited house covers the deed, the registry and the rest of the sale.

Records To Keep

Hold on to these so you can support your basis if the IRS ever asks:

  • The date-of-death appraisal for real estate and for anything else of real worth
  • Brokerage and bank statements showing date-of-death balances
  • The estate inventory, if one was filed, or the waiver paperwork if it was not
  • Receipts for capital improvements you make after inheriting
  • The closing statement and selling-expense records from the sale

Keep them at least three years past the return that reports the sale. Longer is safer, and storage is cheap next to a disputed gain.

Frequently Asked Questions

Does New Hampshire tax me when I inherit property?

No, and three separate chapters say so. RSA 86, the legacy and succession tax, is printed as repealed in its entirety effective January 1, 2003. RSA 87, the estate tax, is still printed in full but RSA 87:9 voids the whole chapter for people who die after the federal credit for state death taxes was repealed. RSA 77, Taxation of Incomes, is printed as repealed effective January 1, 2025. Federal capital gains tax still applies when you sell.

Where is the date-of-death value written down in a New Hampshire estate?

In the inventory. RSA 554:1 makes every administrator file one within 90 days after the date of appointment, listing all real and personal property, the fair market values as of the decedent's date of death, and how each value was determined. The 90 days runs from appointment, not from the death.

What if the estate never files an inventory?

That happens often in New Hampshire. RSA 553:32 removes the inventory, the bond and the accounting when a single beneficiary or heir serves as administrator, or when everyone who inherits consents. Those are the most common family estates, so the court file may hold no date-of-death value at all. Order your own appraisal instead of waiting for a document nobody has to file.

Can I use the town's assessed value as my basis?

It is risky. RSA 554:1 lets an inventory value rest on an appraisal, tax information, a bank statement or another source, and RSA 554:1, II says no appraiser is required. A town assessment is set for property tax purposes and often trails the market, so a date-of-death appraisal from a licensed appraiser is the number that holds up.

Does a New Hampshire transfer on death deed cost the heir the step-up?

No. RSA 563-D:12 says the deed does not affect the owner's rights during life and creates no interest in the beneficiary, and RSA 563-D:13 transfers the property only at death and only if the owner still owned it then. Owning the property at death is what IRC Section 1014 asks for, so the basis resets even though the land skips probate.

How long do I have to sell before the step-up runs out?

It does not run out. Your basis is fixed at the date-of-death value, and the clock only affects how much the property gains after that date. Inherited property also counts as long-term from day one under IRC Section 1223, so the long-term rates apply even if you sell the month you inherit.

This guide is general information about New Hampshire estates, not advice for your situation.

Sources:

It is not legal advice.

Information current as of August 3, 2026

Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in New Hampshire can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.

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