It’s one of the most consequential decisions a family makes during probate. Here’s a clear framework to work through it.
Key Takeaways
- An inherited home usually gets a stepped-up basis to its value at the date of death.
- That step-up can dramatically reduce — or eliminate — capital gains tax if you sell soon.
- Keeping works when an heir wants to live there and can cover costs.
- Renting can generate income but adds management, maintenance, and tax complexity.
- Selling is often cleanest when there are multiple heirs or the home needs work.
First, understand the stepped-up basis
This is the rule most families don’t know about — and it changes everything. When you inherit property, your cost basis is generally “stepped up” to the home’s fair market value on the date the previous owner died, rather than what they originally paid for it.
Here’s why that matters: imagine a parent bought a Boca Raton home decades ago for $90,000, and it’s worth $600,000 today. If they had sold it during life, they’d owe capital gains tax on roughly $510,000 of appreciation. But because you inherited it, your basis steps up to $600,000. If you sell shortly after for $600,000, your taxable gain is close to zero. The longer you hold it after inheriting, the more new appreciation can become taxable — which is why timing matters.
The three options, side by side
| Option | Best when… | Watch out for… |
|---|---|---|
| Sell | Multiple heirs, the home needs repairs, or no one wants to manage it. Stepped-up basis often means low/no capital gains. | Probate authority, court approval if required, and selling costs. |
| Rent | Strong rental demand, the home is in good shape, and heirs want ongoing income. | Landlord duties, vacancy and repairs, insurance, and loss of the immediate step-up advantage. |
| Keep | One heir wants to live there and can buy out the others and cover costs. | Funding a buyout, mortgage/insurance in a coastal market, and fairness among heirs. |
Florida Probate Home Sale Checklist
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Run the carrying-cost math
Before deciding, add up what the home costs every month even if it sits empty: property taxes, insurance (often significant in South Florida), HOA dues, utilities, maintenance, and any mortgage. In Palm Beach County, insurance and taxes alone can make holding an inherited home far more expensive than families expect. Compare that ongoing cost against realistic rent and against simply selling and reinvesting the proceeds.
Don’t forget the people part
When several heirs share a home, “keep” and “rent” require everyone to agree — on management, expenses, and an eventual exit. Selling is frequently the cleanest path to a fair, final split, which is why many estates with multiple beneficiaries end up listing the property. If you do sell, confirm your authority first; see whether you need court approval to sell.
This article is for general educational purposes and is not legal or tax advice. Tax outcomes depend on your specific situation. Aubreigh Hutchison is a licensed Florida real estate professional, not an attorney or CPA. Consult a qualified tax advisor and probate attorney before deciding.
