Inheriting a house that is paid off can be a great financial benefit, but it also comes with a number of responsibilities. The first step is to understand the legal process of transferring ownership of the house. Depending on the state, this may involve a transfer of title, probate court, or other legal paperwork.
Beneficiaries may need to pay out-of-pocket for ongoing expenses like property taxes, utilities, insurance and general upkeep. Also, the probate process is a matter of public record. This means that the details of your estate, including information about your home, become accessible to the public.
If you inherit a house, changing the deed is one of the first things you'll want to do. It's an important step that ensures your name is on the deed and proves your legal entitlement to the property moving forward. Here's a step by step guide that breaks down this process.
Unless your parents put their estate in trust, their assets will go into probate. Even if you have lived there all your life, it will go to probate. If you are the only child then it will all likely go to go. If there are siblings, you may have to sell the house to divide the estate.
Beck, Lenox & Stolzer Estate Planning and Elder Law, LLC, knows from experience how bad behavior can erupt among the siblings as well. Many people think children automatically inherit a house when their parents die, but this isn't true. It's possible for children to inherit without a will, but it doesn't always happen.
Timelines for transferring property after the owner's death vary by state and can range from a few months to over a year.
In California, real property is one of the most valuable assets you can inherit from a loved one. But inheriting real estate that has increased in value over time can trigger capital gains tax consequences when you sell that piece of property.
It depends on your personal circumstances. If you want to live in the home or use it as a rental property, keeping it obviously makes sense. If you don't want to do either — or if it needs significant work that you don't want to commit to — selling it will make more sense.
The basis of property inherited from a decedent is generally one of the following: The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).
A disclaimer is an heir's legal refusal to accept a gift or a bequest. The disclaiming party does not have the authority to direct who inherits their share. If you properly execute a disclaimer, the asset disclaimed will pass to whoever would have received it had you died before the person who left the asset to you.
A surviving spouse may also be responsible for paying back a mortgage taken out by the deceased spouse alone if the couple lives in a community property state such as Arizona, California, Texas, or Washington.
Selling a property with your name on the deed but not on the mortgage creates added levels of complexity and requires more collaboration with third parties. However, you can achieve a successful sale with careful planning and the right support.
Home equity loan on a paid-off home
You'll also likely need to pay closing costs, and as with any mortgage, you risk losing your home if you can't pay it back.
When you inherit a home, its tax basis will be stepped up to reflect the home's current market value, which often entirely eliminates any capital gains taxes that may be due. Any major sums spent on the home, such as renovations or big repairs, can also add to the tax basis (decreasing any sale proceeds).
Many people worry about the estate tax affecting the inheritance they pass along to their children, but it's not a reality most people will face. In 2025, the first $13,990,000 of an estate is exempt from federal estate taxes, up from $13,610,000 in 2024. Estate taxes are based on the size of the estate.
Report the sale on Schedule D (Form 1040), Capital Gains and Losses and on Form 8949, Sales and Other Dispositions of Capital Assets: If you sell the property for more than your basis, you have a taxable gain.
The Hive Law indicates, "A house can stay in a deceased person's name until either the probate process is completed or legal actions require a change in ownership. Typically, the probate process takes 6 months to 2 years, depending on the jurisdiction and complexity of the estate.
It is here that it is determined if probate is required. If the total of all assets of the estate is below $166,250 or if there aren't any assets that require a complex transfer, the estate may not require a probate in California.
Inheritance hijacking can be simply defined as inheritance theft — when a person steals what was intended to be left to another party. This phenomenon can manifest in a variety of ways, including the following: Someone exerts undue influence over a person and convinces them to name them an heir.
“Cash is king when it comes to leaving an inheritance,” said Carbone. “It's the simplest asset to deal with in terms of a transfer.”