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according to Coldwell Banker Global Luxury 2026 Trend ReportNearly $2.4 trillion in U.S. real estate is expected to change hands over the next decade as baby boomers pass on wealth to their heirs. Gen For many people, that inheritance will also include a home.
Inheriting real estate comes with financial obligations that can overwhelm most heirs, and the decisions you make in the first few months matter more than most people realize.
Also see five powerful ways women are using inherited wealth.
Most heirs miss out on tax benefits
When someone dies, the IRS resets the cost basis of their home to its fair market value at the time of death. So if your parents bought their home for $100,000 in 1987 and it’s worth $600,000 when they pass away, your cost basis is the $600,000, not what they originally paid.
Sell it at that appraised value, and your taxable profit is zero. Capital gains tax is calculated based on the sales price minus the cost, and if those two numbers match, there is nothing to tax.
Most of the heirs are not aware of this. Some people take costly decisions because of this. “I’ve met people who took out a second mortgage to hold onto an inherited property because they were afraid of the tax bill,” says estate planning attorney Ryan Duffy. estate planning of the carolinas. “The whole time they probably could have sold it and not owed anything.”
Costs that start before you’re ready
Property taxes, utilities, homeowner’s association fees and any remaining mortgage don’t wait for griefing or probate. An often overlooked risk is that most homeowner policies become void if the named insured dies. Heirs who don’t learn about coverage promptly may end up with an uninsured estate if something goes wrong.
Deferred maintenance is another blind spot. Older homes often require significant repairs before they can be listed, rented, or insured.
Hidden debts may also come to light. “Reverse mortgages, home equity lines, and unpaid contractor liens can surface after death, leaving heirs liable for obligations they didn’t know about,” said Anna Blood, a family law attorney and founder. Blood Law PLLC.
keep, rent or sell
There are real trade-offs in each path. Selling immediately after death generally results in little or no capital gains tax. Renting changes your tax picture and adds responsibilities as a landlord. Holding it means bearing all carrying costs indefinitely.
If multiple heirs are involved, disagreements could result in a partition action, which is a court-forced sale that benefits no one. Duffy recommends getting a professional evaluation within 90 days. “Not Zillow. An actual appraiser who looks at the property,” he said.
step to make now
Before it becomes your problem, talk to family about property, mortgages and estate planning. Understand how the title is placed. A properly funded living trust allows a home to be transferred directly to heirs without probate. Heirs who never formally transfer the deed create a legal problem that grows larger over time.
Money transfer is already happening. The successors who come forward treat it as a financial decision from day one.