Probate Knowledge Center

Taxes and Capital Gains

Stepped-up basis, capital gains, and estate tax basics.

• What is the stepped-up basis on an inherited home?The stepped-up basis resets an inherited home’s tax basis to its value on the date of death, sharply reducing capital gains when you sell.
• Will I owe capital gains tax when I sell an inherited house?You owe capital gains only on appreciation after the date of death. The stepped-up basis usually makes the taxable gain small on a prompt sale.
• Do I pay income tax on the money I inherit from a home sale?California has no inheritance tax. Inherited money is not income, though capital gains can apply to post-death appreciation when you sell.
• Will the property taxes go up on an inherited home (Prop 19)?Under Proposition 19, most inherited California homes are reassessed to current value unless a child moves in and meets strict requirements.
• What is the probate referee and why does the appraisal matter?A probate referee is a court-appointed appraiser who values estate assets. The appraisal sets the price floor and helps establish the stepped-up basis.
• Do I need a date of death appraisal?Yes, a date-of-death value is important. It sets the stepped-up basis for capital gains and, via the referee, the estate’s inventory value.