What to Do When You Inherit a House in California, Part 3: Sell or Not Sell?

What are my options when I inherit a house? Should I sell, move-in, or rent? What if I inherit a house with other siblings?

By Maya Bovshow, CEO, Trust Properties USA

You’ve done the paperwork. You’ve secured the house you inherited. You’ve wrapped your head around probate or the trust. Now comes the big decision: What should you do with the house itself?

There’s no universal right answer. Some people want to move in. Others want a clean break. Some see rental potential. Others see a ticking financial time bomb. Multiple beneficiaries may be involved. The key is understanding your options—and the pros and cons of each.

Every situation is so different that I can only outline the factors here. We work through these issues with families every day, and we invite you to contact Trust Properties USA to understand your options and make the best decision.

Should I Sell a House I Inherited in California?

This is often the most practical and emotionally freeing option, especially if:

• There are multiple heirs.
• You live far away.
• The house needs work.
• You cannot afford the upkeep and property taxes—which will almost certainly go up from what they were.
• You simply don’t want the hassle of owning or renting the house.

 If the house is still in probate when you begin the sales process, remember:

• A sale requires court approval in many cases.
• The process may be complex.
• Work with an expert real estate agent for probate sales like Trust Properties USA, certified for Probate Sales in California.

Regardless of the Process, Trust Properties Can Help with the Sale:

• We help you determine whether to sell as-is or invest in improvements before a sale.
• If improvements make sense, we front all renovation costs with our Fix and Sell strategy.
• We manage the entire process from start to finish.
• We never take any ownership interest in the house.
• You get maximum value without upfront investment or stress.

It’s not just a financial decision. It’s an emotional one. Many families find peace of mind in letting go, especially when the home carries painful memories or difficult associations.

Please do read the warning I offered in the first blog of this series about the many sharks and scams out there offering “quick cash sales.” Take your time and speak with reputable advisors and agencies like Trust Properties USA. Learn more about our complete services here.

Should I Move Into an Inherited House or Not?

Simply “moving in” may be a compelling option, but it’s important to consider all the issues:

• Other heirs: If there are multiple heirs or beneficiaries of a will or trust, it often proves extremely difficult for one of them to take possession of the house. How are the other assets divided so things are fair, especially with the high value of real estate in California? Most often, when multiple heirs are involved, people decide to sell the house and divide the assets.
• Title transfer: You’ll need to legally transfer the deed into your name, or better yet, the name of your own living trust. This may require probate, a trust certificate, or a small estate affidavit.
• Mortgage: If the home still has a mortgage, you may need to assume the loan, refinance, or pay it off. Federal law allows heirs to take over certain existing loans without triggering a due-on-sale clause—but check with the lender.
• Home condition: Is the house move-in ready? Or does it need repairs, upgrades, or cleaning before it’s livable?
• Tax reassessment: If you’re a child inheriting a parent’s primary residence and plan to live in it as your primary residence, you may qualify for Prop 19’s partial reassessment exclusion (subject to value caps). But you have to file the claim promptly. More on tax issues below—but they may be a big factor in your decision!

Pro Tip: Be realistic about costs. Many inherited homes haven’t been renovated in decades. Deferred maintenance can add up. And a property tax reassessment could make the house unaffordable. Get the full picture working with a qualified agent like Trust Properties USA.

Should I Keep an Inherited Property as a Rental?

If you are considering keeping the house as a rental, remember that you are essentially launching a business, and you’ll need to consider all the factors in a profit/loss/hassle context.

What to Consider:

• Multiple heirs: If there are multiple heirs or beneficiaries to a will or trust, how could a rental benefit all? How would this new business be structured? Should a family LLC (Limited Liability Company) be formed which one family member would administer and the rest benefit from? Such arrangements could be profitable or could result in numerous family issues–like who would assume control? Consult an attorney with experience in California investment real estate.
• Market research: What could the home realistically rent for? What’s the demand in the area?
• Repairs and compliance: Are there code violations or needed updates to legally rent it out?
• Landlord responsibilities: Being a landlord means handling repairs, collecting rent, screening tenants, dealing with eviction laws, and keeping up with local rental ordinances—some of which are very strict in California. Do your homework: What laws control rentals in your area? Are there rent controls or limits on evictions?
• Insurance and liability: You’ll need landlord insurance, not just homeowner’s insurance. Be prepared for liability exposure. To limit liability, investigate the possibility of forming that LLC to hold the property. Note that property insurance is an increasingly difficult issue in California, consult with a local insurance broker before assuming you will be able to obtain such insurance in your area.
• Property management: If you live out of the area, consider hiring a professional manager (typically 8-10% of rent).

Tax Considerations on Rentals of Inherited Homes:

• You’ll report rental income to the IRS, but you can also deduct property taxes, repairs, depreciation, and more.
• If the home was reassessed under Prop 19 (as will likely occur), new property taxes may reduce profit margins.
• Work with a CPA and probably an attorney to figure out these issues well in advance of your decision.

In the next blog, I look at the tax issues you will face on an inherited property in California. Buckle up, it can get complicated!

Best, Maya
Maya Bovshow, CEO, Trust Properties USA

Maximizing the equity your family took a lifetime to build.

If you are dealing with a property in probate or trust, call us today at 📞 1-800-579-4380