California Inherited Home Stepped-Up Basis Guide for Heirs and Sellers

Last updated November 13, 2026. Reviewed by the Cash Home Buyers CA team. Figures come from IRS Publication 551 and the California State Board of Equalization; sources are listed at the end. This is general information, not tax advice.

When you inherit a house, your tax basis is generally its fair market value on the date the owner died, not what the owner paid for it. That is called a stepped-up basis, and it can erase years of appreciation for tax purposes. This guide explains how it works for a California house, how it relates to property tax reassessment, and how to sell an inherited house in California.

Inherited home basis at a glance

What is a stepped-up basis?

Basis is the starting number used to measure gain. For a house you buy, basis is mainly the purchase price plus improvements. For a house you inherit, the IRS explains in Publication 551 that the basis is generally the property’s fair market value at the decedent’s date of death. A house bought for $200,000 and worth $800,000 at death starts with an $800,000 basis in the heir’s hands.

If you sell soon after for about that value, there is little or no gain to report. If the house rises in value before you sell, only the increase after the date of death is gain. Certain estates must report values to beneficiaries, and the IRS says some beneficiaries must use the value reported by the estate, so ask the executor for the figure.

Inherited home gain calculator

Compare your sale price with the date-of-death value to see the gain on an inherited house. Use your own figures.

How does a California inheritance affect property tax?

Property tax is separate from income tax. The State Board of Equalization explains that a death is the change in ownership date, and when a revocable trust becomes irrevocable (typically at the trustor’s death) the date of death is the change-in-ownership date. After a change in ownership, the county Assessor can reassess the property to market value.

Proposition 19 provides an exclusion for a family home.

It applies when the home was the transferor’s principal residence and becomes the heir’s principal residence, and the BOE says the heir files for the homeowners’ exemption within one year of the transfer and the exclusion claim (form BOE-19-P for parent-child) within 3 years of the date of death or before a transfer to a third party.

The BOE also explains that if the heir moves out, the property gets a new taxable value. An heir who sells right away therefore does not usually keep the exclusion. See our Prop 13 and Prop 19 guide for the rules in full.

How to sell an inherited house in California

1. Get the date-of-death value. Ask the executor or trustee for an appraisal. It is your basis.
2. Confirm who can sell. A house in probate needs a personal representative with authority; a house in a trust is sold by the trustee. See our probate guide.
3. Compare offers. A cash buyer skips agent fees and repairs, which can lower your selling costs.
4. Choose the closing date. A quick closing leaves less time for the house to rise above the date-of-death value.
5. Keep your paperwork. Keep the appraisal, the closing statement and any estate valuation reports.

See how we buy houses across California, or call (424) 435-2326.

Stepped-up basis FAQ

What is the tax basis of an inherited California house?

Generally the fair market value on the date of death, according to IRS Publication 551.

Do I owe capital gains if I sell an inherited house right away?

Only on the gain above the date-of-death value. A sale near that value often has little or no gain.

Does inheriting a house trigger a property tax reassessment?

A death is generally a change in ownership, so the Assessor may reassess. Proposition 19 can exclude a family home that becomes your principal residence.

How do I prove the date-of-death value?

Usually with an appraisal as of the date of death, which the executor, trustee or your tax professional can help arrange.

Sources

• IRS Publication 551, Basis of Assets
• California State Board of Equalization: Proposition 19

This guide is general information, not tax or legal advice. Confirm your situation with a tax professional.