If you have just inherited a parent's house in Orange County, three questions shape almost everything that follows: who has legal authority to act for the house, whether one of the children will move in, and what the home was worth on the date of death.
The short version: a house in a living trust can usually be sold by the successor trustee without court involvement; otherwise the estate may need probate. Under Proposition 19, the parent's lower property tax assessment largely carries over only if a child makes the home their principal residence within one year. If nobody moves in, the home is reassessed to its date-of-death market value. And because inherited property generally gets a "stepped-up" tax basis, selling soon after inheriting often produces little taxable gain.
This article is general information, not legal or tax advice. Before you sign or file anything, talk with a probate or estate attorney and a CPA who can review your family's documents.
First steps: trust, probate or a small-estate procedure
How title was held decides the path, so start by finding the most recent deed and any trust documents. Homes held in joint tenancy or passed by a transfer on death deed follow their own procedures.
If the house was in a living trust
The successor trustee named in the trust takes over. Trust property doesn't go through probate, and California law gives trustees the power to sell, subject to the trust's terms. The trustee must notify beneficiaries and heirs within 60 days of the death, which starts a window, generally 120 days, for anyone who wants to contest the trust. Ask your attorney whether to wait for it to close before distributing sale proceeds.
If the house goes through probate
If the home was in the parent's name alone with no trust, the court usually appoints a personal representative: an executor named in the will, who receives "letters testamentary," or an administrator, who receives "letters of administration." No one can sell the house until the court issues letters. The California courts say formal probate typically takes 9 to 18 months, sometimes longer.
The letters state whether the representative has full or limited authority under the Independent Administration of Estates Act:
- Full authority: the representative can sell after giving interested people a Notice of Proposed Action at least 15 days ahead. If someone objects, the sale proceeds only under court supervision.
- Limited authority: the court must confirm the sale. The price generally must be at least 90% of an appraisal made within a year of the hearing, and other buyers can overbid in court, starting at the accepted offer plus 10% of the first $10,000 and 5% of the rest.
Small-estate procedures
For deaths on or after April 1, 2025, heirs can petition the court for the decedent's primary residence in California if a probate referee values it at $750,000 or less. The petition (form DE-310) can be filed at least 40 days after death. A separate small-estate affidavit collects personal property, not the house, when countable assets total $208,850 or less. These limits are next adjusted April 1, 2028.
Tell the Orange County Assessor
For property tax purposes, the date of death is the change in ownership, even if a new deed is recorded much later. A change in ownership statement (form BOE-502-D) must be filed with the Orange County Assessor within 150 days of the death, or in probate, by the time the inventory and appraisal is filed with the court. If the home is reassessed, expect supplemental or escape tax bills that reach back to the date of death.
Proposition 19: what it protects
Proposition 19's parent-child rules apply to transfers on or after February 16, 2021:
- They cover only the parent's family home (a home eligible for the homeowners' or disabled veterans' exemption because the parent owned and lived there) or a family farm. Rentals and second homes don't qualify.
- At least one child who inherits must make it their principal residence within one year of the date of death and file for the homeowners' or disabled veterans' exemption within that year. Not every sibling has to move in.
- The claim form (BOE-19-P) must be filed within three years of the date of death or before the home is transferred to a third party, whichever comes first.
There is also a value cap: the parent's factored base year value plus an amount that started at $1 million and is adjusted every two years. For transfers from February 16, 2025 through February 15, 2027, which includes all of 2026, that amount is $1,044,586. Market value above the cap is added to the parent's factored base year value.
A hypothetical example (you can try your own numbers in our Prop 19 calculator): the parent's factored base year value is $300,000, and the home is worth $1,500,000 at the parent's death in 2026. The cap is $1,344,586, so the $155,414 above it is added to $300,000, for a new taxable value of $455,414 instead of $1,500,000. At California's base property tax rate of 1%, before voter-approved bonds and local assessments, that difference is roughly $10,450 a year. Our guide to Orange County property taxes explains the rest of the bill.
If no child moves in within the year, the home is reassessed to its date-of-death market value. If the child who lived there later moves out, the exclusion is removed as of the next lien date unless another eligible child moves in within a year. Renting to a tenant doesn't keep the exclusion.
Taxes when you sell: the stepped-up basis
An heir's federal tax basis in an inherited home is generally its fair market value on the date of death, not what the parents paid, and inherited property counts as held long-term no matter how soon you sell. California taxes capital gains as ordinary income.
Say the parents paid $180,000 decades ago, the home was worth $1,200,000 at death, and the heirs sell eight months later for $1,280,000 with $50,000 in selling costs. The gain is measured from $1,200,000, so it's about $30,000, not the roughly $1,050,000 the original price would suggest.
Get a written appraisal of the home's date-of-death value from a licensed appraiser, even when the house is in a trust; in probate, the probate referee also values it for the court inventory. Keep records of improvements made after the death, which add to basis. Federal estate tax applies only to estates above $15 million for 2026 deaths, and California has no estate or inheritance tax of its own. Our article on capital gains tax on California home sales goes deeper.
Keep, rent or sell
Carrying costs start right away: property taxes, insurance, utilities, HOA dues, maintenance and any mortgage. Keep paying the mortgage; federal rules generally stop a lender from calling the loan due just because the home passed to a relative at death. A reverse mortgage generally becomes due after the last borrower dies, so contact that servicer early. Our breakdown of the true cost of owning a home in Orange County covers the line items.
Keeping it to live in works when one child genuinely wants the home and can maintain it. If that sibling wants to buy out the others, structure matters: the State Board of Equalization treats sibling-to-sibling transfers after distribution as reassessable, while an uneven distribution handled through the estate or trust may be treated differently. Settle this with the attorney before anyone signs a deed.
Renting it out means the home is reassessed, you take on landlord duties under state and local tenant laws, and the tax picture gets more complex.
Selling is often the cleanest choice when several siblings share ownership and nobody plans to live there. Co-owners must agree on price, repairs and timing; if they truly can't, California law lets a co-owner ask a court to partition the property, a slow and costly route.
Selling as-is limits upfront spending and suits estates short on cash or time, while cleaning, paint, landscaping and small repairs can widen the pool of buyers. Our article on maximizing your home's value before selling walks through the trade-offs.
Practical notes for selling an inherited home
Disclosures. California's Transfer Disclosure Statement (TDS) doesn't apply to court-ordered sales, including probate sales, or to sales by a fiduciary administering a trust or a decedent's estate. One exception: a trustee of a revocable trust who is an individual and a former owner of the home, or who lived there within the past year, can't use the trust exemption. Exempt from the form isn't the same as nothing to disclose. Listing agents must still visually inspect the home and disclose material facts they find, the federal lead-based paint disclosure still applies to most homes built before 1978, and heirs should share what they know.
Clearing out the house. Before donating or hauling anything away, collect deeds, trust documents, tax bills, insurance policies and HOA records. Belongings are part of the trust or estate, so the trustee or executor decides how they are divided or sold. Keep every receipt.
Vacant-home insurance. Tell the insurance company that the owner has died and whether the house is empty. Many policies limit coverage once a home has been vacant for a set period, so ask about a vacancy endorsement or a vacant-dwelling policy, keep the utilities on and check the house regularly.
How Remark Homes can help
We work alongside the trustee or executor and their attorney and CPA: pricing the home as-is versus after light preparation, coordinating cleanout and repair vendors, and handling the listing, disclosures and escrow, including the timing a Notice of Proposed Action or court confirmation adds. Learn more about our home selling services, or contact us to talk through your family's options.
Frequently asked questions
Do all of the heirs have to live in the house to keep the Prop 19 exclusion?
No. At least one child who inherits must make it their principal residence within one year of the date of death and file for the homeowners' or disabled veterans' exemption. The exclusion lasts only while an eligible child keeps living there.
Can the executor sell the house before probate is closed?
Yes, once the court issues letters. With full authority, the executor can sell after a Notice of Proposed Action; with limited authority, the sale needs court confirmation.
Will we owe capital gains tax if we sell soon after inheriting?
Often very little, because the basis generally resets to the home's fair market value on the date of death. Your CPA can confirm the numbers.
What if our parent was living in a care facility before passing?
The home can still count as the parent's principal residence for Prop 19 if the parent would have lived there but for the confinement, intended to return, and the home wasn't rented to anyone other than an immediate family member. Confirm with the Orange County Assessor or your attorney.
Sources
- California State Board of Equalization: Proposition 19
- California State Board of Equalization: Death of a Real Property Owner, Reporting Requirements
- California Courts Self-Help Guide: Check if you can use a simple process to transfer property
- Superior Court of California, County of Orange: Administering the Probate Estate
- IRS: Publication 551, Basis of Assets
- California Legislative Information: Civil Code section 1102.2
