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The short answer
For US tax, property you inherit from someone who has died, including a house or land in Nigeria, generally takes a basis equal to its fair market value on the date of death (section 1014 of the Internal Revenue Code). When you later sell, your gain or loss is measured from that value, converted to dollars at the rate on the date of death, and the gain is treated as long-term however soon you sell. The rule does not depend on where the property is, so the work is in proving the value.
The rule in one paragraph
Section 1014(a)(1) of the US tax code says the basis of property acquired from a decedent is "the fair market value of the property at the date of the decedent's death". Section 1014(b)(1) applies this to property acquired by bequest, devise or inheritance. Neither provision limits the rule to US property or to US decedents, so a plot in Enugu left to you by your mother is treated in the same way as a house in Houston. People call this a "stepped-up" basis because the value usually rises over a parent's lifetime, but it can also step down: if the property was worth less at death than the parent paid, the lower value is your basis.
IRS Publication 551 (revised December 2025) lists the main ways the basis of inherited property is set:
- the fair market value at the date of death, which is the usual case;
- the value on the alternate valuation date, if the personal representative chooses alternate valuation for the estate;
- a special-use value for real property used in farming or a closely held business, where that was chosen for estate tax purposes;
- the decedent's adjusted basis in land, to the extent its value was excluded from the taxable estate as a qualified conservation easement.
The last three depend on a US estate tax return. For most Nigerian estates, where no US estate return is filed, the date-of-death value is the one that matters.
Two exceptions to know about
Property you gave away shortly before death
Section 1014(e) stops a simple trick. If you (or your spouse) gave appreciated property to the person who died within one year before their death, and it comes back to you, your basis is the decedent's adjusted basis immediately before death, not the market value. In practice this catches a child who transferred a property to an ill parent hoping to inherit it back with a higher basis.
The Schedule A value
Where an executor files a US estate tax return, beneficiaries generally receive a Schedule A (Form 8971), and Publication 551 says certain beneficiaries must use that value as their starting basis. If no Schedule A was issued, the publication says an appraised value used for state inheritance or transmission tax can be used. For an estate administered only in Nigeria there will usually be no Schedule A, so you are left to show the value yourself.
Converting naira to dollars
Your basis is a dollar figure. The IRS publishes yearly average exchange rates but its table has no naira row, and it says it has no official rate of its own; it accepts any posted rate used consistently and generally expects the spot rate on the date of the event. So you convert the date-of-death value at the rate on the date of death, and the sale price at the rate on the date of sale. The Central Bank of Nigeria publishes official rates, including monthly averages, on its exchange rates page; keep a dated screenshot or download of the rate you used.
| Step | Example (illustrative figures only) |
|---|---|
| Value at death, 1 Mar 2024 | ₦150,000,000 per a dated valuation report |
| Rate on that date (example) | ₦1,500 to $1 |
| US basis | $100,000 |
| Sale in 2026 | ₦300,000,000 |
| Rate on sale date (example) | ₦1,350 to $1 |
| Amount realised | $222,222 |
| Gain for US purposes | $122,222, long-term |
Change one input and the result changes sharply. If the same property sold for ₦180,000,000 at an example rate of ₦1,800 to $1, the amount realised would be $100,000 and there would be no US gain at all, even though the naira price rose by ₦30 million. The naira figures can tell a very different story from the dollar figures, which is why the dated rate matters as much as the valuation.
Holding period and tax rate
Section 1223(9) treats a person who acquires property from a decedent, with basis set under section 1014, as having held it for more than one year if they sell within a year of the death. So the gain is long-term. IRS Topic 409 sets out the long-term capital gains rates (0%, 15% and 20%, by taxable income) and notes that a loss on personal-use property, such as a home you live in, is not deductible. If the inherited house is held as an investment or rental, a loss on sale may be a capital loss.
There is no US income tax treaty with Nigeria; the IRS treaty list includes Egypt, Morocco, South Africa and Tunisia from Africa, not Nigeria. Nigerian tax on the same sale is a separate question, covered in our guide to selling Nigerian property and tax in both countries.
Records that make the basis stand up
- The death certificate or other proof of the date of death.
- Letters of administration or the probated will, and any vesting deed or assent putting the property in your name.
- A valuation as at the date of death by a qualified Nigerian valuer, stating the method and comparable sales. A valuation written years later can be dated back, but say so in the report.
- The exchange rate you used and where it came from.
- Evidence of the sale: the deed of assignment, receipts and the bank credit.
Inheriting a foreign property is not itself income. Separately, if you receive more than $100,000 in a tax year from a nonresident alien or a foreign estate, including bequests, the IRS expects Form 3520; it is an information return, not a tax. See receiving an inheritance from Nigeria and inheriting property in Nigeria while living in the US.
Where Pryme fits
When you sell, the buyer's naira payment can land in your Pryme account and stay in naira until you choose to convert with Swap; the app shows the rate and the fee before you approve, which gives you a dated record of the conversion. You can also generate a verifiable statement with VerifyDoc.ai to support the sale figures in your file.
Questions people ask
Do I get a stepped-up basis on property inherited in Nigeria?
Generally yes. Section 1014 sets basis at fair market value at the date of death and does not limit this to US property.
What exchange rate do I use for the basis?
The IRS has no naira rate of its own. Use a posted rate for the date of death consistently, such as the CBN's published rate, and keep evidence of it.
Is the gain short-term if I sell within a year?
No. Section 1223(9) treats inherited property with a section 1014 basis as held for more than one year.
Do I pay US tax when I inherit the property?
Inheriting is not income. Form 3520 may be due as an information return if bequests from a foreign estate exceed $100,000 in the year.
Sources
- IRS Publication 551 (12/2025), Basis of Assets: Inherited Property · accessed Oct 2026
- 26 U.S. Code s.1014, Basis of property acquired from a decedent (Cornell LII) · accessed Oct 2026
- 26 U.S. Code s.1223, Holding period of property (Cornell LII) · accessed Oct 2026
- IRS Topic 409, Capital gains and losses (reviewed 24 Sep 2026) · accessed Oct 2026
- IRS: Yearly average currency exchange rates (reviewed 17 Sep 2026) · accessed Oct 2026
- IRS: Gifts from foreign person (Form 3520) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.