Capital Gains on an Inherited or Investment Home (Step-Up Basis)
If you inherited a home, or you are selling an investment property, the capital-gains picture is different from a primary residence — and for heirs, often far better than expected, thanks to step-up basis. Here is how it works in California, with a CPA and the IRS for your specifics.
Get Your Free Cash Offer Now!
Fill out this form to get your no-obligation all cash offer started!
Get Your Free Offer TODAY!
Fill In This Form To Get Your No-Obligation All Cash Offer Started!
How Step-Up Basis Works
Per IRS Publication 523, when you inherit a home, your basis is generally ‘stepped up’ to the property's fair-market value on the date of death. That matters because your taxable gain is the sale price minus your basis — so if you sell soon after inheriting, there may be little or no gain at all. Only appreciation after the date of death is typically taxable to you.
Community Property in California
California is a community-property state, which can help a surviving spouse. When one spouse dies, the full fair-market value of the community-property home can become the survivor's basis — a ‘double step-up’ — rather than just the deceased spouse's half. This can substantially reduce the gain on a later sale. The rules are specific, so confirm your situation with a CPA.
Investment and Rental Homes
Selling an investment or rental property is different again: there is no Section 121 exclusion, and prior depreciation may be ‘recaptured’ and taxed. Some investors defer gain with a 1031 exchange into another investment property, but that has strict rules and timelines. If you are selling a rental, a CPA can map the gain, depreciation recapture, and any exchange options — this is squarely professional territory.
Why Selling As-Is Often Makes Sense Here
Inherited and investment homes are frequently dated, tenant-occupied, or in need of work — exactly the kind of property a fast as-is cash sale handles best. With step-up basis often keeping the gain small, a quick sale can be both simple and tax-efficient. We buy as-is, no repairs or cleanup, and close on your timeline; you confirm the tax details with your CPA. This is general information, not tax advice.
Explore More Resources
Get a Cash Offer on an Inherited or Investment Home
Call (559) 392-2243 or fill out the form. Tell us about the property, and we will give you a fair all-cash offer in 24 hours and a clean closing for your CPA.
Get Your Free Offer TODAY!
Fill In This Form To Get Your No-Obligation All Cash Offer Started!