Math on inheriting your parents’ California home has totally changed

When my grandparents moved to California from Taiwan in the early ’90s, they bought a home in the East Bay for just over $320,000. That home is now worth five times that amount, and it’s become my home — my husband and I are gradually renovating and planning for the long haul; one day we will inherit it. 

We feel incredibly fortunate, as it’s unlikely we would be able to afford such a home on our own. Yet, as the Wall Street Journal recently reported, the math on inheriting a home is changing, with many people in similar situations to mine finding the benefits of keeping an inherited property not as great as they once were. 

This is especially true in California, where a proposition that went into effect in 2021 has dramatically changed the inheritance math, with one estate attorney calling it the “worst thing to happen in inheritance law in California in decades.”

So in California and the Bay Area, what options do you have if you inherit a home, or are planning to pass property on to your children? What factors should you consider before deciding to live in the home, rent it out or sell it?

Welcome to Hella Expensive, a column that’s aimed at helping readers navigate the financial aspects of living in the Bay Area. In each column, I’ll present a topic that impacts your bank account and future: homeownership and renting, the path to retirement, and how to manage your money in this infamously expensive region. Send your financial questions and concerns to me through the survey below, or email me at

The positives of inheriting a home — and keeping it

If your parents left you their home, it can seem like a jackpot in the expensive Bay Area. Keeping a family home can also be very meaningful, especially after the difficulty of losing a parent.

“There’s a lot of sentimental value in inheriting a home,” said San Francisco estate planning and probate attorney Elizabeth Button. “ ‘We grew up here, we don’t want to get rid of it.’ It would be like saying goodbye to a family member all over again.”

Emotional attachment is a major driver for some of Button’s clients, some of whom have even taken second jobs to afford the costs of keeping the family home, she said.

For those who choose to sell, the inherited property comes with a built-in capital-gains tax perk, experts said.

“If you are planning to sell the property, there should be minimal [capital gains] taxes since the value of the home gets ‘stepped up’ or moved up to the fair market value at the time of death, freeing the inheritor from capital gains taxes in most cases,” said Ariana Alisjahbana, lead adviser with North Berkeley Wealth Management.

Read More: Math on inheriting your parents’ California home has totally changed

2023-11-11 20:22:29

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