What to do when you inherit a house: a financial & tax planning guide

Inheriting a home can feel both emotionally complex and financially overwhelming. While it's a gift that carries value, it also comes with serious decisions - especially when it comes to taxes, ownership responsibilities, and long-term planning. At Alphanso, we help you make confident, informed decisions supporting your financial goals.

Here’s a step-by-step guide to help you manage the transition with clarity.

Step 1: Understand the home’s value and condition

Start by getting the property appraised to determine its fair market value. You may also want a professional inspection to assess any needed repairs or long-term maintenance issues. This gives you a realistic picture of what you're inheriting - whether it’s an asset to keep, sell, or rent out.

Step 2: Know the tax implications

Taxes can significantly affect your next move. Here’s what you should keep in mind:

• Step-up in basis: When you inherit property, the cost basis is reset to the fair market value at the date of death - potentially reducing capital gains taxes if you sell.
• Estate taxes: While most estates fall below the federal threshold ($13.99 million in 2025), state-level estate or inheritance taxes may still apply.
• Capital gains: If you sell the home for more than the stepped-up value, you may owe tax on the gains. Alphanso helps you calculate and optimize these outcomes in real time.

Step 3: Account for ongoing costs

Inheriting a home doesn’t just mean gaining an asset - it may also mean inheriting new expenses, including:

• Property taxes
• Insurance premiums
• Utility bills
• Maintenance & repairs
• HOA fees (which average around $259/month nationally)

If these costs don’t fit your financial picture, selling or renting the property may be the better option.

Step 4: Decide: sell, rent, or keep?

Sell: This may be a smart move if you need liquidity or don’t plan to live in the home. Alphanso’s advisory services can help you analyze the local real estate market before deciding.

Rent: Turning the property into a rental can create passive income. Alphanso helps evaluate if forming an LLC makes sense for liability protection and tax efficiency.

Keep: If the home fits your long-term plans or has sentimental value, consider buying out other heirs, refinancing, or including it in your estate plan.

Step 5: Review debts or mortgages

If there’s a mortgage or lien on the property, you’ll need to decide whether to assume the mortgage, refinance, or sell to settle debts.

Step 6: Get expert guidance

Before making any major financial decisions, consider consulting with a qualified estate planning professional. Whether it's tax optimization, property management, or long-term cash flow planning, expert advice can help ensure you’re making informed choices that align with your goals and protect your financial future.

Plan smarter with Alphanso

At Alphanso, we believe in simplifying wealth management. If you’ve inherited a property, our team can help you integrate it into a holistic financial strategy that aligns with your long-term goals - whether that means keeping, selling, or investing elsewhere.

Schedule a consultation with an Alphanso advisor today and take control of your next financial chapter.

Read more: Backdoor Roth IRA explained: unlock tax-free retirement benefits

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