I just inherited a home. Should I move in, rent or sell it?

I just inherited a home. Should I move in, rent or sell it?

Deciding whether to move into, rent out, or sell an inherited home is a financial, tax, and emotional decision that you should approach with the same discipline you would use for any major investment. In 2026, the stepped-up basis and higher federal estate tax exemption create a unique window of opportunity for heirs who plan carefully.

Who is Ramesh Rao and how can he help?

Ramesh Rao is a Coldwell Banker Realty Realtor in Cupertino, focused on data-driven, high-accountability representation for Silicon Valley homeowners and heirs. Clients seek me out because I combine detailed neighborhood analytics with clear pricing and negotiation strategies that stand up to scrutiny from today’s highly informed buyers.

Over the years, I’ve been consistently recognized within Coldwell Banker’s International President’s Premier and related award tiers, which puts my production and results in the top tier of agents worldwide, but what matters most to my clients is that I treat inherited-property decisions as if they were my own, grounded in numbers, tax realities, and family dynamics.

Guiding heirs through “move in vs rent vs sell” is one of the most nuanced parts of my practice in Cupertino, Saratoga, Los Altos, San Carlos, and greater Silicon Valley, where high-value homes, complex tax rules, and sibling dynamics often intersect.

Tip: Before you decide anything, treat this inherited home as an asset on a balance sheet, not just a house with memories. Emotion can inform the decision, but numbers should drive it.

The Three Core Paths At A Glance

Here is a concise snapshot of your three primary options:

Option	Best If…	Primary Benefit	Main Risk You Might Underestimate
Move In	You need or want a primary residence in this location and can afford ongoing costs.	Preserves family legacy, may qualify for future home-sale tax exclusions.	Underestimating total ownership cost (taxes, insurance, maintenance, opportunity cost of tied-up equity).
Rent Out	You want long-term, possibly generational, wealth-building and the property is in a strong rental market.	Ongoing income plus potential long-term appreciation.	Landlord obligations, vacancy risk, and potential major capital expenses (roof, systems) at the worst time.
Sell	You need liquidity, live far away, or must coordinate with other heirs.	Immediate cash, simpler estate settlement, eliminates property risk.	Losing future appreciation and the emotional “anchor” of a family home.

The right answer is never “what people normally do”—it is what best aligns with your tax bracket, cash reserves, time horizon, and family structure.

Tip: Put a simple 5-year forecast on paper for each option (net cash in or out each year, plus likely equity). Seeing the numbers side-by-side often makes the “right” path obvious.

2026 Tax Landscape: Why Timing Matters

In 2026, the federal estate and gift tax exemption is approximately $15$ million per person, or $30$ million for married couples, which means most heirs in Silicon Valley will not owe federal estate tax at all.

More importantly, the stepped-up basis means your tax “cost” of the property is reset to its fair market value as of the date of death, so if you sell relatively soon at or near that value, your capital gains exposure may be minimal or even zero, aside from selling costs.

Simple Tax-Impact Snapshot (If You Sell Soon)

Item	Before Inheritance	After Inheritance (2026)
Original purchase price (parents)	Very low if bought decades ago	Irrelevant to you for capital gains purposes
Your tax basis	N/A	Stepped up to fair market value at date of death
Likely federal estate tax	Possibly significant in theory	Often zero if estate is under $15M/$30M exemption in 2026
Capital gains if sold near appraised value	N/A	Often minimal (gain = sale price − stepped-up basis − selling costs)

Tip: Do not rely on online estimates for your “stepped-up” value. Order a formal, retrospective appraisal for the date of death and keep that report with your records; it’s your audit-proof foundation.

California And Prop 19: The Crucial One-Year Rule

If your inherited property is in California, Prop 19 dramatically changes your property tax outcome. To avoid a full reassessment to today’s market value, you must both inherit a qualifying primary residence and move in and claim it as your own primary residence within one year of transfer.

For transfers between February 16, 2025 and February 15, 2027, only the first $1,044,586 of value above the prior assessed value is protected from reassessment; amounts above that can be added to your taxable value, increasing your annual property tax.

Prop 19 Effect: Example Structure

Scenario	What You Do	Property Tax Outcome
Move in within one year and file for Homeowner’s Exemption	You permanently make the home your primary residence.	Only limited reassessment: original base + up to $1,044,586 of excess value; taxes often remain far below full market-based tax.
Keep as rental from day one	You do not move in or file homeowner’s exemption.	Full reassessment to current market value; annual taxes jump significantly.
Delay decision for more than a year	You are undecided, do not occupy.	You likely lose the exclusion and face a reassessment anyway.

Tip: If the home is in Cupertino, Saratoga, or nearby, the gap between the old tax base and current value can be enormous. Run a side-by-side comparison of “Prop 19 primary residence” taxes vs “fully reassessed rental” before choosing rent over move-in.

Option 1: Move Into The Inherited Home

Moving into the home can be powerful if the location, schools, and lifestyle are superior to where you live now, or if Prop 19 tax savings are substantial relative to renting or buying elsewhere.

You can also position yourself for the primary residence exclusion in the future—when you eventually sell, part of your gain (up to the federal limits in effect then) may be excluded if it has been your principal residence for the required period.

Living In The Home – Key Upsides And Risks

Advantage	Why It Matters In Silicon Valley
Potentially lower long-term property tax under Prop 19	Essential if the existing tax base is far below current market value.
Emotional continuity	Keeping a parent’s home in the family can bring meaning and stability.
Control over improvements	You can upgrade strategically to match your lifestyle and long-term value goals.

Hidden Risk	How It Shows Up
Underfunded maintenance	Older roofs, plumbing, and foundations can turn into surprise $50K–$150K capital events.
Opportunity cost	Equity “parked” in a low-yield home may underperform other investments.
Lifestyle mismatch	Commute, schools, or layout might not truly fit your life, even if the home is sentimental.

Tip: Treat the decision as if you were buying the inherited home from the open market today. If you would not buy this home at its current fair market price, think carefully before moving in.

Option 2: Rent Out The Inherited Home

If the home sits in a strong rental corridor—Cupertino schools, walkable to Apple or other major employers—renting can be an attractive wealth-building strategy, especially if the home is already paid off or has a low loan balance.

Rental income can offset expenses, and over time, you may enjoy both appreciation and debt paydown; however, your property tax may be fully reassessed if you do not occupy under Prop 19, and you must be comfortable with landlord duties or hiring a manager.

Rental Economics Overview

Component	Typical Question	What You Need To Know
Market rent	“What could this realistically rent for?”	Look at recent, verified rentals for similar homes within 0.5–1 mile and same school boundaries.
Net cash flow	“Will it put money in my pocket each month?”	Subtract taxes, insurance, maintenance, HOA, management, and reserves from projected rent.
Capital reserve	“What if the roof fails?”	Plan a yearly reserve for big-ticket items (roof, HVAC, sewer, windows).

Tip: Model a “stress case” rental scenario: 10% vacancy, a 15–20% drop in rent, and a major repair in year 3. If the numbers still work, you likely have a resilient rental plan.

Option 3: Sell The Inherited Home

Selling can be the cleanest solution if you live out of area, need liquidity, share the property with siblings, or prefer to simplify your life. The 2026 stepped-up basis may allow you to walk away with a large, low-tax lump sum, especially after professional preparation and marketing.

In Silicon Valley, the difference between a lightly cleaned home and a properly prepped, staged, and marketed listing can easily reach six figures; this is where my team’s data-driven pricing and disciplined execution become critical.

Common Sale Paths

Path	Best For	Key Trade-Off
Full preparation & retail sale	Well-located home in good structural condition.	Higher net, but requires time and some upfront investment.
Light clean-up + “as-is” sale on MLS	Dated but sound homes where heirs want speed.	Faster close, slightly lower price than fully prepped home.
Investor or flipper off-market	Homes with major structural or systems issues.	Simplest and fastest, but typically the lowest price.

Tip: Do not assume a “quick investor sale” is your only option, even if the home is dated. A targeted, as-is listing with transparent disclosures often nets significantly more than a private investor offer. A very small upgrade such as a fresh coat of paint and resurfacing the flooring can go a long way in getting a much higher offer price.

Multiple Heirs: Money, Fairness, And Future Holidays

When there are siblings or multiple heirs, the property can become a flashpoint. Often, the healthiest long-term approach is to sell and divide proceeds equitably, particularly when not everyone has the same financial capacity or desire to co-own.

If one heir wants to keep the home while others want cash, a structured buyout using an independent appraisal and clear timelines can prevent resentment later. Document everything and pair it with professional guidance from a tax advisor and attorney.

Tip: Agree early on a shared “decision framework”. For example, “We will choose the option that maximizes net value while staying fair to all parties,” then let the numbers, not emotions, drive the outcome. It may also work better if one sibling has the power of attorney to sell it, especially if all the siblings are not easily accessible.

Immediate Action Plan: What To Do In The Next 30 Days

Here is the exact roadmap I recommend when you inherit a home and are unsure whether to move in, rent, or sell:

Order a professional appraisal pegged to the date of death to lock in your stepped-up basis.
Pull a full property profile and title report to confirm ownership, liens, and any unpaid taxes.
Inspect the property’s major systems (roof, foundation, plumbing, electrical, sewer) so your decision is grounded in actual condition, not guesswork.
Meet with a CPA who understands both federal rules and California nuances (including Prop 19 and, if relevant, any state-level inheritance tax in other states).
Have a strategy meeting with a local, data-driven agent who has deep experience with inherited properties—this is where I come in for Cupertino and surrounding Silicon Valley markets.

Tip: Treat these steps as due diligence on a multi-million-dollar asset. A half-day of structured analysis can protect you from a six-figure mistake.

How I, Ramesh Rao, Plug Into Your Decision

As a top Cupertino listing and advisory agent, my role is not just to sell a home; it is to help you decide if selling is even the right move for you at this moment.

When heirs contact me after inheriting a home, I typically:

Build a detailed market valuation including “sell now,” “lightly improve and sell,” and “hold as rental” scenarios.
Coordinate retrospective appraisals, pre-list inspections, and contractor bids so you see real numbers, not guesses.
Model Prop 19 outcomes if the property is in California and you are considering moving in vs keeping it as a rental.
Design a sale and marketing strategy (if you choose to sell) that maximizes your net, not just your gross price, with full transparency on likely timelines and outcomes.

If you’ve just inherited a home in Cupertino or surrounding Silicon Valley and are wondering, “Should I move in, rent it out, or sell it?”, the smartest next step is a structured, data-backed consultation tailored to your exact property, tax picture, and family situation. That gives you clarity, protects your interests, and turns a stressful inheritance into a confident, well-defended decision. Please consult a tax professional to discuss any tax implications of one decision over another.