Inheriting a Royalton Unit: The Texas Sequence and the Basis Step-Up

What is the basis of an inherited home at The Royalton?

IRS Publication 551, revised December 2025, gives the basis of property inherited from a decedent as the fair market value of the property at the date of the individual's death. Basis is the figure any later gain or loss is measured from, and it stands in place of what the owner paid for the home and in place of what they spent on it afterwards.

The publication lists four ways basis can be set: the fair market value at the date of death; the fair market value on the alternate valuation date, where the personal representative for the estate chooses to use alternate valuation; the value under the special-use valuation method for real property used in farming or a closely held business, where that is chosen for estate tax purposes; and the decedent's adjusted basis in land, to the extent of the portion of the value excluded from the taxable estate as a qualified conservation easement. A home in an ordinary estate takes the first of those.

The alternate valuation date is an election the personal representative makes, and for how that election works Publication 551 sends a reader to the Instructions for Form 706.

One reporting step catches people. Where an estate is required to file a federal estate tax return (Form 706), the estate beneficiaries generally receive a Schedule A (Form 8971) from the executor of the estate, reporting the estate tax value of the property distributed to them, and certain beneficiaries are required to use that reported value as their initial basis in what they received. Where no Schedule A arrives, the publication says basis in the property can be determined using the appraised value at the date of death for state inheritance or transmission tax purposes.

One exception is worth naming. Appreciated property that you or your spouse originally gave the decedent within 1 year before their death takes a different figure: the same basis as the decedent's adjusted basis in the property immediately before their death. Appreciated property means property whose fair market value on the day it was given to the decedent was more than its adjusted basis.

All of that is the rule as Publication 551 states it. The figures in any one estate, starting with the appraised value of the home as of the date of death, belong with a tax professional.

What does Texas community property do to the step-up?

Texas is one of nine community property states Publication 551 names. In those states, married individuals are each usually considered to own half the community property.

The rule the publication states runs like this: when either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. A condition is attached to it. For the rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Publication 555, revised December 2024, states the same rule from the surviving owner's side.

The publication works its own example. A couple owned community property with a basis of $80,000. When one spouse died, half the fair market value of the community interest was includible in that spouse's estate, and the fair market value of the community interest was $100,000. The basis of the survivor's half is then $50,000, half of the $100,000 fair market value, and the basis of the other half to the heirs is also $50,000.

Whether the rule reaches a particular home turns on whether the home is community property at all, and Publication 555 defines both terms. Community property is property acquired during the marriage while the couple is domiciled in a community property state, including the part of property bought with community property funds where part was bought with community funds and part with separate funds; property the couple agreed to convert from separate to community property; and property that cannot be identified as separate property. Separate property is property one spouse owned separately before the marriage; money earned while domiciled in a noncommunity property state; property either of them received as a gift or inherited separately during the marriage; property bought with separate funds, or exchanged for separate property, during the marriage; property converted from community to separate property through an agreement valid under state law; and the part of property bought with separate funds where part was bought with community funds and part with separate funds.

A home owned jointly rather than as community property is a different case, and Publication 523 sets it out for a surviving spouse: the new basis for the interest the deceased owner held is its fair market value on the date of death, or the alternate valuation date, while the basis in the survivor's own interest remains the same, and the new basis in the home is the total of those two amounts.

What has to happen in Texas before the home can be sold?

Four routes run through the Texas courts, and what decides between them is the will, the debts and whether everyone agrees.

Independent administration is the route a Texas will most often provides for. A person making a will may provide that no other action be had in the probate court in relation to settling the estate than the probating and recording of the will and the return of any required inventory, appraisement and list of claims. Where a will names an executor without providing for an independent administration, all of the distributees may agree on the advisability of having one and collectively designate the named executor in the application for probate. Unless limited by the terms of a will, an independent executor may take any action a personal representative under court supervision could take with or without a court order, and has the same power of sale as a representative in a supervised administration, without the requirement of court approval and without the procedural requirements that apply to a supervised administration. The will is therefore the first document to read, because it can narrow both.

Letters testamentary are the document that lets someone sign for the estate. Before the 21st day after the date a will has been probated, the court shall grant them, if permitted by law, to each executor appointed by the will who is not disqualified and is willing to accept the trust and qualify according to law.

Probate of the will as a muniment of title is the lightest route. A court may admit a will that way where it is satisfied the will should be admitted to probate and either is satisfied the estate owes no unpaid debt other than a debt secured by a lien on real estate, or finds for another reason that there is no necessity for administration of the estate. The order is then sufficient legal authority for anyone who purchases from or otherwise deals with the estate to transfer the applicable asset without administration, and a person entitled to property under that will may deal with and treat the property in the same manner as if the record of title stood in their own name. Not later than the 180th day after the will is admitted, the applicant files a sworn affidavit with the court clerk stating which terms of the will have been fulfilled and which have not.

Where there is no will, a court may conduct a proceeding to declare heirship. Each unknown heir of the decedent, each person named as an heir in the application, and every person shown by the deed records of the county as owning a share or interest in the real property described in the application must be made a party to it.

One deadline shapes the whole choice. A will may not be admitted to probate after the fourth anniversary of the testator's death unless it is shown that the applicant was not in default in failing to present it by then, and letters testamentary may not be issued on a will admitted after that anniversary unless the application for probate was filed on or before it. Both rules carry an exception for a foreign will, which the Estates Code handles in sections of its own.

Is an affidavit of heirship enough?

An affidavit of heirship is evidence on a clock. In a proceeding to declare heirship or a suit involving title to property, a court shall receive a statement of facts concerning the family history, genealogy, marital status or the identity of the heirs of a decedent as prima facie evidence of the facts in it where the statement sits in an affidavit or other instrument legally executed and acknowledged or sworn to before a certifying officer, or in a judgment of a court of record, and where that instrument has been of record for five years or more in the deed records of a county in which the property is located at the time a suit involving title is commenced, or of a county in which the decedent was domiciled or had a fixed place of residence at death.

The same chapter adds a limit: an affidavit of facts concerning the identity of a decedent's heirs does not affect the rights of an omitted heir or creditor of the decedent as otherwise provided by law. So what a family holds after recording one is evidence that reaches prima facie footing at five years and that cuts off nobody who was left out.

That is why a buyer, a lender and a title company may want the court's judgment instead, either a will admitted to probate or a proceeding to declare heirship with every required party joined. A recorded affidavit still does work in the deed records, and it does that work alongside, rather than in place of, whatever a court later decides.

What keeps running at The Royalton while all of this happens?

The assessment does not pause for an estate. After an initial assessment by an association, assessments must be made at least annually and must be based on a budget adopted at least annually by the association, so the monthly figure is a yearly decision that keeps being made while an estate is open.

An assessment levied against a unit or a unit owner is a personal obligation of the unit owner and is secured by a continuing lien on the unit and on rents and insurance proceeds received by the owner and relating to that unit. The statutory definition of assessments is wide: regular and special assessments, dues, fees, charges, interest, late fees, fines, collection costs, attorney's fees and any other amount due to the association or levied against the unit, all of them enforceable as assessments unless the declaration provides otherwise. The lien is created by recordation of the declaration, which constitutes record notice and perfection, so unless the declaration provides otherwise there is no separate lien filing to look for. A past due assessment or installment of an assessment may bear interest at a lawful rate established by the association.

For scale, the median monthly fee reported on the homes sold at The Royalton was $1,377 in 2026, on a series computed 31 August 2026. That figure is the middle of the monthly fees attached to the homes that sold here, rather than this association's rate or its adopted budget. The same series reports a median combined property tax rate of about 2.09 percent on homes sold here in 2026, a median across sold homes that carries the exemptions those owners held.

So write to the association early. A resale certificate runs on a ten-day clock from a written request by the unit owner, and one of the statements it carries is what the selling owner owes.

What changes if the person who inherits later lives there?

Two rules stack for the person who inherits a home and then lives in it. The basis is the fair market value on the date of the owner's death, or the later alternate valuation date chosen by the personal representative of the estate, and that is where any later gain is measured from.

On the sale of a main home, Publication 523 allows the first $250,000 of gain to be excluded from income, and $500,000 for a married couple filing jointly, where its Eligibility Test is met. Three of that test's parts decide most sales. Ownership: the home was owned for at least 24 months out of the last 5 years leading up to the date of the closing. Residence: the home was owned and used as a residence for at least 24 months of the previous 5 years, and those months can fall anywhere within the 5-year period, with a total of 24 months (730 days) required rather than a single block of time. Look-back: no other home was sold during the 2-year period before the date of sale, or one was and no exclusion of the gain from it was taken, because the exclusion may be taken only once during a 2-year period.

The publication extends the ownership and residence requirements for a surviving spouse. A surviving spouse who does not meet the 2-year ownership and residence requirements alone, and who has not remarried at the time of the sale, may include any time when the late spouse owned and lived in the home, even if without them. The exclusion can also rise from $250,000 to $500,000 where all of the following hold: the home is sold within 2 years of the death of the spouse, the survivor has not remarried at the time of the sale, neither the survivor nor the late spouse took the exclusion on another home sold less than 2 years before the date of the current sale, and the 2-year ownership and residence requirements are met, including the late spouse's times of ownership and residence where they apply.

Inheriting a home and living in it are different facts with different consequences, and the sequence is worth pricing before it is chosen.

What paperwork does the sale itself need here?

Before executing a contract, the unit owner must furnish the purchaser a current copy of the declaration, the bylaws, any association rules, and a resale certificate that must have been prepared no earlier than three months before the date it is delivered. Not later than the 10th day after receiving a written request from a unit owner, the association must furnish that certificate to the owner or the owner's agent.

Four of the certificate's statements do most of the work for an estate: any right of first refusal or other restraint contained in the declaration that restricts the right to transfer a unit; the amount of the periodic common expense assessment and the unpaid common expenses or special assessments currently due and payable from the selling unit owner; other unpaid fees or amounts payable to the association by that owner; and all fees payable to the association or an agent of the association that are associated with the transfer of ownership, including a description of each fee, to whom the fee is paid and the amount.

One statutory notice stops short of an estate sale. The seller's disclosure requirement in Section 5.008 of the Texas Property Code does not apply to a transfer by a fiduciary in the course of the administration of a decedent's estate, a guardianship, a conservatorship or a trust. That removes a form rather than a duty to give a buyer truthful answers, and it leaves the association's own documents exactly where they were.

This building adds a complication of its own. The assessment on each home follows that home's allocated interest in the recorded condominium declaration rather than its floor area, so an estate cannot work out the carrying cost from a rate per square foot. The schedule in the declaration, reported through the certificate, is where the home's own figure lives.

For the transaction side, who to hire and how a home here is priced when the floor plan is unknown, this site's page on probate and estate sales at The Royalton sets that out.

What can this page not tell you?

A figure for any one estate lives outside a rule book. Every number above is a rule or a rate, and the basis of a particular home is an appraisal of that home as of a date of death, which an appraiser produces and a tax professional works with.

Whether a federal estate tax return is required for a particular estate is a question for the Instructions for Form 706 and for a tax professional.

Which of the four routes an estate takes through the Texas courts is settled by the will, the debts and whether the distributees agree, with the lawyer handling the estate. How long a probate takes is answered by the court hearing it.

Whether this building's declaration restricts a transfer on death, or carries a right of first refusal, is answered by the recorded declaration, which the seller furnishes with the association documents and the county's real property records also hold, and the certificate's first statement is where an estate meets that answer. The schedule of allocated interests attached to that declaration carries this home's share of the common expenses.

All of the above is an explanation with its sources attached rather than tax or legal advice.