Inheriting a House in California: What to Do

Inheriting a house comes with a to-do list that arrives at the worst possible time, in the middle of grief. Knowing the steps in advance makes it far less overwhelming. The path depends mostly on how the home was owned, which determines whether you can act quickly or must first clear a court process. Here is what to do when you inherit a California home.

First, find out how the home was held

The single most important question is how the property was titled, because it determines everything that follows:

• In a living trust: the home passes to the named beneficiaries without probate, through the trustee. This is the smoothest path.
• In joint tenancy: the property passes automatically to the surviving joint owner, outside probate.
• With a transfer-on-death deed: it passes to the named beneficiary outside probate.
• Owned solely, with none of the above: the home generally must go through probate or a simplified court procedure before it can be transferred or sold.

Locate the deed, any trust documents, and the will. These tell you which path applies. Our probate guide covers what to do if a court process is required.

Handle the immediate practical matters

Regardless of the legal path, a few things need attention quickly. Keep the property secure and insured, an inherited home may need a vacancy insurance rider if no one is living there. Continue any mortgage payments to avoid default, since the loan does not disappear at death. Keep up property taxes. And gather documents: the death certificate, deed, mortgage statements, insurance, and recent tax bills. These practical steps protect the asset while you sort out the rest.

Decide: keep, rent, or sell

Once you understand the legal path, the real decision is what to do with the home. Keeping it as your own residence may have property-tax consequences under Proposition 19, which limits inheriting a parent's low tax base to primary residences that you move into within a year. Renting it generates income but makes you a landlord and typically triggers reassessment to market value. Selling it, often the choice when there are multiple heirs or no desire to manage property, is frequently tax-efficient because of the stepped-up basis.

If multiple heirs share the property, you will need to agree, and if you cannot, there are legal remedies, though selling and splitting the proceeds is the most common resolution. Our guide to selling an inherited house covers that route.

Understand the tax picture

California has no inheritance tax, and most estates owe no federal estate tax. The number that matters most is the stepped-up basis: your cost basis in the home resets to its value at the date of death, so if you sell soon after, your capital gains tax is often minimal. Property taxes, however, may rise under Proposition 19 depending on what you do with the home. Our Prop 19 guide covers that.

Serve First Realty helps you weigh keeping versus selling with the real numbers, and Ashlar LDA can prepare many of the documents involved at your direction. This is general information, not legal or tax advice; consult a qualified attorney or CPA about your situation.