If you inherit a home in California, you can usually rent it out, sell it, or move in, and the right choice comes down to three numbers: what the home would rent for, what the property tax becomes after the transfer, and what you would net from a sale after the step up in tax basis. Under Prop 19, a parent’s low property tax base only carries over if a child moves in as their main home, so a home you rent out is reassessed to market value.
Most families we talk to are working through this while grieving, coordinating with siblings, and sorting a house full of belongings. You do not have to decide in the first week. This is the order we walk heirs through in Los Angeles and Orange County.
Step 1: Secure the house and keep the bills paid
- Rekey the locks and collect every spare key you can find.
- Keep the utilities, insurance and property tax current. Missed payments create problems that are harder to fix than the bills themselves.
- Call the insurance company. Many homeowner policies limit coverage once a home sits vacant for 30 to 60 days.
- Check for an existing tenant. A lease stays in effect after the owner passes, and the new owner or estate takes over as landlord, including the security deposit.
Step 2: Find out who can legally act for the property
If the home was held in a living trust, the successor trustee can usually rent or sell it without going to court. If it was not, the estate may need to go through probate, and the executor or administrator needs court authority before signing a lease or a listing agreement. Talk with an estate attorney early, because this step sets your whole timeline.
Step 3: Understand what Prop 19 does to the property tax
Before 2021, children could keep a parent’s Prop 13 tax base on almost any inherited home. Prop 19 changed that:
- The parent’s tax base only transfers if the home becomes the child’s principal residence and the child files for the homeowners’ exemption within one year.
- Even then, the benefit is capped at the old taxable value plus $1,044,586 for transfers between February 16, 2025 and February 15, 2027.
- If you rent the home out instead, the county reassesses it to current market value. On a home your parents bought decades ago, the new tax bill can be several times the old one.
Run your rent numbers with the new tax bill, not your parents’ bill.
Step 4: Know your tax basis before you sell
Federal tax law generally resets an inherited home’s cost basis to its fair market value on the date of death, often called the step up in basis. If you sell soon after inheriting, there is often little or no capital gain to pay tax on. If you rent the home first and sell later, appreciation after the date of death is taxable, and depreciation you take as a landlord is recaptured when you sell. Get a date of death appraisal either way. Your CPA will ask for it.
Step 5: Run the rent versus sell math
| Question | Points toward renting | Points toward selling |
|---|---|---|
| Rent vs. new monthly costs | Rent covers the reassessed tax, insurance, HOA and upkeep with room left over | Rent barely covers the new tax bill |
| Condition | Needs paint, flooring and small repairs | Needs a roof, plumbing or other major work |
| The heirs | One heir, or siblings who agree to hold it | Siblings want cash or cannot agree |
| Your plans | You want long term income or may move in later | You need the money now |
To get a real rent number, we combine comparable rentals from the MLS and rental listing data into one report. Pricing is the biggest factor in how fast a home rents and who rents it. Here is how we price a rental.
Step 6: If you keep it, get it rent ready
Inherited homes usually need some make ready work before they show well: paint, flooring, fixtures, yard cleanup, and safety items like smoke and carbon monoxide detectors. The home should be fully empty before showings start. We list a home only after make ready is done and professional photos are taken, and homes we price correctly typically lease in 7 to 21 days.
Step 7: Decide how hands off you want to be
When siblings co-own a rental, one person usually ends up taking every call. A property manager gives the family one point of contact and one monthly statement everyone can see. At Skybridge, single family management is a flat $149 per month, leasing is 50% of the first month’s rent, there is no onboarding fee, and you can cancel with 30 days’ notice. Our tenants are screened for a 720 credit score, income of 2.5 times the rent, and no prior evictions. See full pricing.
Frequently asked questions
Can I rent out an inherited house in California?
Yes. If the home was in a trust, the successor trustee can lease it. If it is in probate, the executor usually needs court authority first. Expect the property tax to be reassessed to market value, because a rental is not your principal residence.
Do I lose my parents’ Prop 13 tax rate if I rent the house out?
Yes. Under Prop 19, the parent’s tax base only carries over when the child makes the home their primary residence and files the homeowners’ exemption within one year. A home that is rented out is reassessed.
Is it better to sell an inherited house right away?
Selling soon is often low cost from a tax standpoint because of the step up in basis. Selling makes sense when the rent will not cover the reassessed taxes and upkeep, when the home needs major repairs, or when the heirs need cash. Renting makes sense when the numbers work and someone in the family wants long term income.
What happens if a tenant already lives in the inherited home?
The lease stays in effect. The estate or new owner steps into the landlord’s role, including holding the security deposit. Depending on the city and the age of the building, rent control and just cause eviction rules may also apply.
How do we manage an inherited rental if the heirs live in different states?
Many families hire a local property manager so there is one point of contact and nobody has to fly in for a repair. If any owner lives outside California, the state generally requires the manager to withhold 7% of that owner’s share of the rent for California income tax unless an exemption applies.
Talk it through with us
Call (909) 610-9780 and tell us about the house. We will give you a free rent estimate so you can compare renting with selling. When you call, a real person picks up.
General information, not legal or tax advice. Talk with an estate attorney and a CPA about your situation. Figures are current as of November 2026.
