Inherited a House in Sacramento? The Complete Guide

Change or rekey the locks and make a list of everyone who has a key. Call the insurance carrier, tell them the owner has passed and the home is empty, and ask in writing whether the policy still covers a vacant home. Keep the power, water and gas on. They protect the house, and an appraiser or buyer will need to see everything working.

Walk every room with your phone and take photos before anything moves. It protects you later if someone asks what was there. Then hold off on clearing it out. Wills, trust papers, deeds and loan statements are often sitting in a drawer, and giving things away before the estate has authority can cause trouble with the other heirs.

If a spouse has passed and the house was owned together, the path is often shorter. A surviving spouse can ask the court to confirm the house passes to them, and transfers to a surviving spouse are not reassessed for property tax.

Our Inherited Home Checklist puts these steps in order on one page.

No one can sign a listing or a purchase contract for the estate until the court issues Letters to the executor or administrator. We can still walk the house, give you a price range and plan the prep work while you wait for them.

With full authority, the personal representative can sell after giving every heir a Notice of Proposed Action at least 15 days ahead. If no one objects, there is no court hearing. With limited authority, a judge confirms the sale at a hearing, and other buyers can show up and bid more.

That court overbid follows a formula. The first overbid has to be at least 10 percent more on the first $10,000 of the accepted offer, plus 5 percent more on the rest. On a $500,000 accepted offer, the minimum first overbid is $525,500. Courts set their own calendars, so we never promise a closing date on a court sale. The hearing date is the real timeline.

An executor works with a probate attorney for the court side. Our job is the house: pricing, preparing, marketing and keeping every heir informed so the notice period goes quietly.

After the heirs receive the servicer's due and payable notice, they have 30 days to say whether they will buy, sell or turn the home over to the lender. That timeline may be extended up to six months so the heirs can sell or arrange their own financing.

To keep the home, the heirs pay off the loan balance. If the balance is more than the home would sell for, the heirs can sell for at least 95 percent of the appraised figure. Send the servicer the death certificate, ask for every deadline in writing, and get a market price early. Six months goes fast when the estate hasn't opened yet.

As a mortgage broker as well as a real estate broker, I can explain the loan side and the sale side together. Call me at (916) 549-3131 about your loan options.

Keep it works best when one heir will live there. Someone still has to cover the loan, insurance, taxes and upkeep while the estate settles. Rent it means someone becomes the landlord, and a rental doesn't get the Prop 19 parent-child exclusion, so expect the property tax to go up.

A buyout lets one heir buy the others' shares. That usually takes a loan, a price everyone accepts and an attorney for the paperwork. If the buyer is also the executor, plan for a court step. Selling gives everyone their share in cash, and no one carries the house.

The fair price is what protects everyone. We price the house from real recent sales nearby, so the sibling who buys and the siblings who sell are working from the same number. When one sibling lives far away, we send the same updates to everyone at the same time.

The step-up in basis. The IRS generally measures an inherited home's basis from its fair market price on the date of death, not what your parent paid. Say a parent paid $90,000 decades ago and the home was worth $600,000 when they passed. If the estate sells for $610,000, the gain starts from $600,000, before the costs of sale. That's an example only, and your CPA confirms how it applies to you.

Property tax and Prop 19. A death is a change in ownership, and the home is reassessed to current market price unless an exclusion applies. Since February 16, 2021, the parent-child exclusion only works when the home was the parent's primary residence and becomes the child's primary residence. The claim form is BOE-19-P, due within three years of the death or before the home transfers to someone else, whichever comes first. If the plan is to sell, the exclusion usually doesn't help.

The change in ownership statement. The assessor has to be told about the death. For trusts and most transfers outside probate, the trustee or the person inheriting files within 150 days.

Transfer tax at the sale. Sacramento County charges $1.10 per $1,000 of the price, and the City of Sacramento charges its own separate transfer tax. Escrow confirms the figure in Placer, El Dorado and Yolo counties, and we show it on your estimated net sheet.