What to do when you inherit a house: a financial & tax planning guide

Inheriting a home can feel both emotionally complex and financially overwhelming. While it’s a gift that carries value, it also comes with serious decisions – especially when it comes to taxes, ownership responsibilities, and long-term planning. At Alphanso, we help you make confident, informed decisions supporting your financial goals.

Here’s a step-by-step guide to help you manage the transition with clarity.

Step 1: Understand the home’s value and condition

Start by getting the property appraised to determine its fair market value. You may also want a professional inspection to assess any needed repairs or long-term maintenance issues. This gives you a realistic picture of what you’re inheriting – whether it’s an asset to keep, sell, or rent out.

Step 2: Know the tax implications

Taxes can significantly affect your next move. Here’s what you should keep in mind:

  • Step-up in basis: When you inherit property, the cost basis is reset to the fair market value at the date of death – potentially reducing capital gains taxes if you sell.
  • Estate taxes: While most estates fall below the federal threshold ($13.99 million in 2025), state-level estate or inheritance taxes may still apply.
  • Capital gains: If you sell the home for more than the stepped-up value, you may owe tax on the gains. Alphanso helps you calculate and optimize these outcomes in real time.

Step 3: Account for ongoing costs

Inheriting a home doesn’t just mean gaining an asset – it may also mean inheriting new expenses, including:

If these costs don’t fit your financial picture, selling or renting the property may be the better option.

Step 4: Decide: sell, rent, or keep?

Sell: This may be a smart move if you need liquidity or don’t plan to live in the home. Alphanso’s advisory services can help you analyze the local real estate market before deciding.

Rent: Turning the property into a rental can create passive income. Alphanso helps evaluate if forming an LLC makes sense for liability protection and tax efficiency.

Keep: If the home fits your long-term plans or has sentimental value, consider buying out other heirs, refinancing, or including it in your estate plan.

Step 5: Review debts or mortgages

If there’s a mortgage or lien on the property, you’ll need to decide whether to assume the mortgage, refinance, or sell to settle debts.

Step 6: Get expert guidance

Before making any major financial decisions, consider consulting with a qualified estate planning professional. Whether it’s tax optimization, property management, or long-term cash flow planning, expert advice can help ensure you’re making informed choices that align with your goals and protect your financial future.

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Plan smarter with Alphanso

At Alphanso, we believe in simplifying wealth management. If you’ve inherited a property, our team can help you integrate it into a holistic financial strategy that aligns with your long-term goals – whether that means keeping, selling, or investing elsewhere.

Schedule a consultation with an Alphanso advisor today and take control of your next financial chapter.

 

Read more: Backdoor Roth IRA explained: unlock tax-free retirement benefits
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