Inheriting a Home? A Step-by-Step Guide to Navigating Your Next Steps

Inheriting a home can be both a financial opportunity and an emotional challenge. Whether the property was left to you by a parent, grandparent, or another loved one, you may find yourself facing complex decisions about what to do next. Should you keep it, rent it out, or sell it? What legal and financial steps do you need to take?

Beyond the emotional aspect of inheriting a family home, there are practical considerations like taxes, maintenance, and potential mortgage obligations. Without proper guidance, the process can feel overwhelming, but understanding your options and taking the right steps can make it much more manageable.

This guide will walk you through everything you need to know about inheriting a home, including legal considerations, financial responsibilities, and how to decide whether to sell, rent, or keep the property.

Let's Dive In

Understanding Your Options

Keep, Rent, or Sell? How to Decide

When you inherit a home, the first major decision is what to do with it. Here are the three main options:

Keep the home – If the home holds sentimental value or you plan to live in it, keeping it may be the best choice. However, you’ll need to consider ongoing maintenance costs, property taxes, and whether there’s an outstanding mortgage.
Rent it out – Turning the property into a rental can provide passive income, but you’ll need to handle landlord responsibilities, property management, and tenant screening.
Sell the home – If you don’t need the property or want to avoid financial burdens, selling might be the simplest and most profitable option. Selling can help you cash out equity and avoid long-term responsibilities.

Each option has its pros and cons, so consider factors like your financial situation, the condition of the home, and your long-term goals before making a decision.

Financial & Tax Considerations of Inheriting a Home

Inheriting a home comes with financial responsibilities that many people don’t initially consider. Key factors to keep in mind include:

Property taxes – Even if the home is mortgage-free, you’ll still need to pay annual property taxes, which can vary widely by location.
Capital gains tax – If you decide to sell, you may be subject to capital gains tax, but you could qualify for a step-up in basis, which can significantly reduce what you owe.
Inheritance tax – Depending on your state, you may need to pay inheritance tax, though most states do not impose one.

Consulting with a tax professional or financial advisor can help you understand your tax obligations and how to minimize costs.

Selling An Inherited Home

Preparing the Home for Sale

If you decide to sell the home, you’ll need to prepare it for the market. This often involves:

Decluttering & removing personal belongings – Sorting through a loved one’s belongings can be emotional, so give yourself time and consider donating or passing items along to family members.
Making necessary repairs – Addressing minor repairs and maintenance issues can help increase the home’s value.
Staging & listing the home – A well-presented home will attract more buyers. Consider working with a real estate agent experienced in estate sales to help market the property effectively.

Navigating Probate & Legal Matters

Before selling an inherited home, you’ll need to determine if it must go through probate. Probate is the legal process of settling an estate, which varies by state. If the home was placed in a trust or had a transfer-on-death deed, probate may not be necessary.

If probate is required, expect the process to take several months, depending on the complexity of the estate. An estate attorney can guide you through the necessary legal steps.

Renting or Keeping the Home

Becoming a Landlord: What to Know

If you decide to rent out the inherited home, you’ll need to understand the responsibilities of being a landlord. Key considerations include:

Tenant screening – Finding reliable tenants is crucial to ensuring steady rental income.
Property management – Will you manage the property yourself, or will you hire a property management company?
Legal obligations – Understanding lease agreements, local rental laws, and maintenance responsibilities is essential.

Renting out the home can provide a steady income stream, but it also requires time and effort to manage tenants and upkeep.

Financial Responsibilities & Maintenance

If you plan to keep the home for personal use, consider whether you can afford the ongoing costs. Even a paid-off home has expenses like:

Property taxes
Home insurance
Repairs & maintenance

If the home needs significant renovations, factor in the cost of upgrades before deciding whether to keep it.

Conclusion: Inheritance Planning Worksheet

Inheriting a home is a major life event that requires careful decision-making. Whether you decide to keep, rent, or sell the property, understanding your options will help you make the best choice for your situation.

To help you navigate the process, download our "Inheritance Planning Worksheet", which includes:
✔️ Questions to help you decide what to do with the home
✔️ A checklist for selling an inherited property
✔️ Key financial and legal considerations