Inheriting a house from your parents sets off a sequence of steps: transferring the title through probate or a trust, keeping the property insured and maintained during the gap, deciding what to do with any mortgage, and figuring out the tax picture before you choose whether to sell, rent, move in, or walk away. A federal rule called the step-up in basis resets the home’s value for tax purposes to its worth on the date of death, which spares most heirs a large capital gains bill if they sell. Everything else depends on what your parent planned for and what the house itself carries with it.
Getting the Title Into Your Name
How the house gets to you depends almost entirely on what kind of estate planning your parent did.
If There Is a Will
A will sends the house through probate. The probate court confirms the will is valid, lets the estate settle its debts, and then authorizes the executor to record a new deed in your name. A straightforward estate with no disputes can wrap up in four to six months. Contested or complex estates can run two years or longer, and during that time the executor controls the property and is responsible for keeping it maintained and insured.
If There Is a Living Trust
A house held in a living trust skips probate entirely. The successor trustee named in the trust document executes a new deed transferring the property to you. The process is faster, cheaper, and private, and it can be finished in weeks rather than months.
If There Is No Will
With no will, the estate is intestate and state law decides who inherits. Every state has intestacy rules that put spouses and children first. If your parent was unmarried, the house typically passes in equal shares to any surviving children. The probate court appoints an administrator, and the process works much like probate with a will, except the court determines the rightful heirs. Intestate probate often takes longer.
Protecting the House in the Meantime
Between the date of death and the day the deed is recorded in your name, the property sits in a vulnerable spot. The executor or administrator has a legal duty to protect estate assets, but somebody needs to take practical charge quickly.
The most overlooked risk is insurance. Standard homeowner’s policies include vacancy clauses that limit or void coverage if the home sits empty for 30 to 60 consecutive days. If nobody moves in right away, contact the insurer immediately about a vacancy endorsement or a separate vacant-home policy. Letting coverage lapse and then having a pipe burst or a break-in can wipe out a large piece of the inheritance.
The rest is basic: keep the utilities running so pipes don’t freeze, mow the lawn so the house doesn’t signal “empty” to the neighborhood, change the locks if you’re unsure who has keys, and check on the property regularly.
What Happens to the Mortgage
If your parent still owed money on the house, you inherit the debt along with the property. Federal law protects you here. The Garn-St Germain Depository Institutions Act bars lenders from enforcing a due-on-sale clause when a property transfers to a relative as a result of the borrower’s death.1Office of the Law Revision Counsel. 12 USC 1701j-3 – Preemption of Due-on-Sale Prohibitions You can step into the existing loan without having to qualify for a new one.
From there, you have three realistic choices: keep making the monthly payments on the existing terms, refinance into your own name if you can get better terms, or pay off the balance using other assets or the proceeds from a sale. Any other liens on the property, such as a home equity line of credit, transfer with the house and need to be resolved as well.
Reverse Mortgages Work on a Short Clock
A reverse mortgage changes the timeline. After the borrower’s death, the lender sends a “due and payable” notice, and heirs have 30 days to decide whether to buy, sell, or surrender the home. Extensions of up to six months are possible to allow time for a sale or a new loan, but you have to request them. If the loan balance exceeds the home’s current value, heirs can satisfy the debt by paying 95% of the appraised value, with federal mortgage insurance covering the rest.2Consumer Financial Protection Bureau. With a Reverse Mortgage Loan, Can My Heirs Keep or Sell My Home After I Die Do nothing and the lender will eventually start foreclosure.
The Tax Picture
The Step-Up in Basis Is the Big One
Under federal law, the cost basis of inherited real estate resets to its fair market value on the date of the owner’s death.3Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent The price your parent originally paid becomes irrelevant for capital gains purposes.
In practice: say your parent bought the house in 1990 for $120,000 and it’s worth $450,000 on the date of death. Your new basis is $450,000. Sell six months later for $460,000 and you owe capital gains tax on $10,000, not on the $330,000 of appreciation that built up during your parent’s lifetime.4Internal Revenue Service. Gifts and Inheritances For families whose parents bought homes decades ago in markets that have since appreciated, the step-up can save tens or even hundreds of thousands in taxes.
Capital Gains If You Sell Later
Any appreciation above your stepped-up basis is taxable when you sell. Inherited property is treated as a long-term capital gain regardless of how long you hold it. For 2026, federal long-term capital gains rates are 0%, 15%, or 20% depending on your taxable income, with most people in the 15% bracket. Higher-income taxpayers may owe the 3.8% net investment income tax on top.
If you move in and use the home as your primary residence for at least two of the five years before selling, you can exclude up to $250,000 of gain ($500,000 for married couples filing jointly) under the principal residence exclusion.5Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence Combined with the step-up, many people who inherit a home, live in it a couple of years, and then sell owe no capital gains tax at all.
Estate and Inheritance Taxes Usually Won’t Hit You
For 2026, the federal estate tax exemption is $15 million per individual, so a married couple’s combined estate can pass up to $30 million before any federal estate tax applies.6Internal Revenue Service. What’s New – Estate and Gift Tax Most inherited homes fall well under this threshold.
About a dozen states impose their own estate or inheritance taxes, often with much lower exemptions. Five states currently levy an inheritance tax based on the heir’s relationship to the deceased, with close relatives like children typically paying reduced rates or nothing. A few state estate tax thresholds are as low as $1 million. If your parent lived in one of these states, check with the state’s department of revenue.
Property Taxes Going Forward
Once the house is yours, you’re responsible for property taxes. In many jurisdictions, the ownership change triggers a reassessment, which can move the bill in either direction. Some states limit reassessment when property transfers between parents and children; others reassess fully. Contact the local assessor’s office early to understand how the transfer affects your bill and whether any exemptions apply.
Medicaid Estate Recovery Can Take the House
This is the issue that catches families off guard more than any other. If your parent received Medicaid-funded nursing home care or certain home-based services after age 55, federal law requires the state to seek repayment from the estate after death.7Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Recovery often targets the family home because it’s the largest asset in the estate.
States cannot pursue recovery while certain protected people are living in the home: a surviving spouse, a child under 21, or a child of any age who is blind or disabled. A sibling who has an equity interest in the home and lived there for at least a year before the parent entered the nursing facility is also protected. Outside those situations, the state can file a claim against the estate or place a lien on the property.
Every state is required to offer a hardship waiver. Federal guidance suggests waivers should be available when the home is the sole income-producing asset for survivors, when the homestead is of modest value, or when other compelling circumstances exist.8Medicaid.gov. Estate Recovery Details vary by state and the process can be bureaucratic, but if recovery would force you out of a home you need to live in, a waiver application is worth pursuing.
Keep It, Rent It, or Sell It
Selling
Selling is the most common choice, especially when you already own a home or the inherited property is in a different area. The step-up in basis makes a quick sale particularly tax-efficient because there’s little or no gain above the new basis. Factor in closing costs, needed repairs, outstanding liens, and real estate commissions when calculating net proceeds. If the home is in probate, the executor may need court approval to sell, which adds time.
Renting
Turning the property into a rental generates income, but it’s a real commitment. You become a landlord: screening tenants, handling maintenance, complying with local landlord-tenant laws, and carrying landlord insurance instead of a standard homeowner’s policy. Net rental income is taxable, though you can deduct expenses like repairs, property management fees, insurance, and depreciation. Your depreciation deduction is calculated from your stepped-up basis, which gives you a higher starting point than your parent’s original purchase price.
Moving In
Moving in makes the house your primary residence. You take on mortgage payments, property taxes, insurance, and upkeep. You may qualify for a homestead exemption that reduces your property tax bill. And if you live there at least two years before selling, the step-up in basis combined with the principal residence exclusion can shelter a significant amount of appreciation from capital gains tax.
When You Inherit the House With Siblings
When multiple siblings inherit a home, they become co-owners. The default in most states is tenancy in common: each sibling holds a separate share that they can sell or pass to their own heirs independently. That’s different from joint tenancy, where a deceased owner’s share passes automatically to the surviving co-owners.
Co-owning a house works only as long as everyone agrees on what to do with it. One sibling may want to sell immediately, another may want to move in, and a third may want to rent. A written co-ownership agreement should cover how taxes, insurance, and repairs are split, what happens if one person wants out, and whether any sibling gets a right of first refusal to buy the others out.
Buying Siblings Out
If one sibling wants to keep the house and the others want cash, a buyout is the cleanest path. The buying sibling typically refinances the property and pulls enough equity to pay the others their share. If the home is still in probate, conventional lenders usually won’t touch it; specialized probate lenders can provide short-term financing, but they require all beneficiaries to approve the loan and the administrator to hold full court authority. After closing, the remaining owner refinances into a conventional mortgage.
When Siblings Cannot Agree
If no voluntary resolution works, any co-owner can file a partition action. A judge can order the property sold and the proceeds divided according to ownership shares. Partition suits are expensive and adversarial, and the forced-sale price is almost always lower than what the house would bring in a normal transaction. Negotiating before filing saves everyone money.
You Can Refuse the Inheritance
You are not obligated to accept the house. If the property carries more liability than value, perhaps because of a large mortgage, environmental contamination, or a Medicaid lien that exceeds the equity, you can formally refuse it through a qualified disclaimer.
Federal tax law sets strict requirements. The refusal must be in writing, delivered to the executor or trustee within nine months of the date of death, and you cannot have already accepted any benefit from the property, such as living in it or collecting rent. If you’re under 21, the nine-month clock starts on your 21st birthday.9Office of the Law Revision Counsel. 26 USC 2518 – Disclaimers Once you disclaim, the property passes as if you had died before your parent, and the next person in line under the will or state intestacy law receives it. You have no say in where it goes.
The nine-month deadline is firm. If a property with heavy liabilities is on the table, make the decision quickly enough to keep the option of walking away.