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Selling Your Parent’s Home

Your parents passed away leaving you their home and you are ready to sell. You may be surprised and happy to know that you have inherited the home with a “stepped-up” basis equal to the value of the home at the date your parent died. 


An exception would be if the home were held in an irrevocable trust created after the earlier death of your other parent. This is an important question to review with the estate attorney. A stepped-up basis could avoid any capital gains tax if the house is sold soon after your parent’s death.


You will need to know how title to the home is held. If there is a trust, are you named as successor trustee? If there isn’t a trust, you may need to be appointed by the court as executor of your parent’s estate in a probate proceeding. Or, if your parent was not the sole owner, title will have to be sorted out before you can sell.


If there is a reverse mortgage on the home, the terms of the loan may give you as little as six months to sell before the lender will foreclose.


The death of your parent almost certainly triggered property tax reassessment. Changes in property tax laws all but eliminated the exclusion from reassessment for transfers between a parent and child. This should be anticipated and reviewed with the estate attorney. In any event, a notice of your parent’s death must be filed with the County Assessor.


If the home needs to be cleaned out, there are professionals who can assist, even if there is a hoarding situation. And if the home is dated or in disrepair, your real estate professional can advise on what repairs or improvements should be made, or not, for a realistic return on the money that would be spent.


After escrow closes, be sure to hold back enough money to cover the property tax bill that will come later. Reassessment dates back to the date of your parent’s death, but the amount of increased tax due to reassessment is unlikely to be available at the time of sale and therefore will not be paid through escrow. When the tax bill comes, you don’t want to be surprised.

By Lisa C. Alexander, Esq.


Direct Line: 310-656-4310

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