What to do with an inherited house: a step-by-step guide

Marcus found the spare key exactly where his father had always kept it, taped under the lid of the grill. Inside, the house smelled the same. The calendar on the fridge was still on March. He stood in the kitchen for a long time before he noticed the stack of mail by the door, and the property tax bill sitting on top of it.

If you've just inherited a house, you're probably feeling some version of that: grief and paperwork arriving at the same time, in the same room. An inherited house is often the biggest asset in an estate, and it's also the one with the most moving parts. There's a mortgage to think about, along with insurance and taxes, and sometimes siblings with very different ideas about what should happen next. This guide walks through what to do with an inherited house in roughly the order you'll need to do it, from the first few weeks to the final decision about keeping, renting, or selling. Rules vary a lot by state, so use this as a starting map and check with a probate or real estate attorney before signing anything big.

What to do first when you inherit a house

In the first few weeks, your job is to protect the house, not to decide its future. The big decisions can wait. Damage, lapsed insurance, and missed payments can't.

Here's a short checklist for the early days:

1. Secure the property. Lock the doors, change the locks if lots of people had keys, and make sure valuables, jewelry, and important papers are somewhere safe.
2. Call the homeowner's insurance company. Tell them the owner has died and ask what's needed to keep coverage active. Many policies have a vacancy clause that limits or ends coverage once a home sits empty for 30 or 60 days, so ask about that directly.
3. Keep the utilities on, at least the heat and water. A burst pipe in January can do more damage to the estate than almost anything else.
4. Forward the mail through the post office so bills and statements reach the executor.
5. Find the deed, the most recent mortgage statement, and the property tax bill. Put copies in one folder.

You'll also want several certified copies of the death certificate, since the county recorder, the mortgage servicer, and the insurer may each want one.

A quick word about the belongings inside. It's tempting to start clearing rooms, and some families find it helps with grief. But until the estate is sorted out, the contents usually belong to the estate too. Take photos of each room and hold off on giving things away until the executor says it's fine.

How the house passes to you: probate, TOD deed, or joint ownership

How you inherit the house determines how fast you can do anything with it. Look at the deed. The way the owner held title matters more than what the will says.

If the house was owned jointly with right of survivorship, often between spouses, the surviving owner gets it automatically. They usually just record a death certificate and a short affidavit with the county.

If the owner used a transfer-on-death deed, the named beneficiary takes the house without going through probate. They typically record an affidavit and the death certificate, and the house is theirs. The same is true if the home was held in a living trust. The successor trustee handles the transfer according to the trust's terms.

If the house was in the deceased person's name alone, with no TOD deed or trust, it almost always goes through probate. That means a court appoints an executor (or administrator, if there was no will), and that person is responsible for the house until it's distributed or sold. Our guide to what probate is and how long it takes explains the process, and in many states it runs anywhere from six months to well over a year. If you're the one in charge, the section on real estate in our post on executor duties is worth reading before you do anything with the property.

This is where families sometimes get stuck. Everyone may agree that the house should go to the youngest daughter, but until the court issues letters testamentary and the executor signs a new deed, she doesn't legally own it. She can't refinance, and she can't sell it either.

What happens to the mortgage on an inherited house?

The mortgage doesn't go away when the owner dies. It stays attached to the house, and someone has to keep paying it, or the lender can eventually foreclose.

The good news is that you usually don't have to pay it off right away. The Garn-St. Germain Act, a federal law from 1982, generally prevents lenders from enforcing the "due on sale" clause when a home passes to a relative after death. In plain terms, if you inherit your mother's house, the bank can't demand the full balance just because the name on the deed changed. You can keep making the existing payments at the existing rate.

Federal mortgage servicing rules also require servicers to communicate with "successors in interest," meaning the people who inherited the home, once they've confirmed who you are. The Consumer Financial Protection Bureau has a plain-language explainer on inheriting a home with a mortgage that's worth reading before you call. When you do call, have the death certificate and proof of your relationship ready, and ask to be recognized as a successor in interest. Then ask whether a payment is due soon. Keeping the loan current while probate runs can save a lot of trouble.

Your children won't personally owe the mortgage if they don't take the house. Our post on what happens to debt when you die covers this in more detail, but the short version is that the debt belongs to the estate and the house is the collateral.

If the house had a reverse mortgage

Reverse mortgages work differently. When the last borrower dies, the loan becomes due. For the most common type, the federally insured HECM, heirs are typically notified and then have about six months to sell the home or pay off the loan, with extensions sometimes available. If the loan balance is higher than the home's value, heirs can usually satisfy it by paying the lesser of the balance or 95% of the appraised value. Call the servicer quickly, because the clock starts early.

Taxes on an inherited house

Most people inheriting a house won't owe any tax just for receiving it. The tax questions come up later, mostly when you sell.

Start with the three taxes people mix up. Federal estate tax is paid by the estate, and only very large estates owe it. The federal exemption is $15 million per person in 2026. Inheritance tax is charged by a few states to the person receiving the property, and as of this writing that list is Pennsylvania, New Jersey, Kentucky, Nebraska, and Maryland, often with spouses and children exempt or taxed at low rates. Capital gains tax applies when you sell the house for more than your "basis."

That last one is where inherited property gets a real break. When you inherit a house, your basis is generally "stepped up" to the home's fair market value on the date of death. So if your parents bought the house for $90,000 in 1985 and it was worth $410,000 when your father died, your basis is $410,000. Sell it for $420,000 a few months later and you'd only owe tax on roughly $10,000 of gain, minus selling costs. The IRS explains this in Publication 551, Basis of Assets.

Because the step-up depends on the value at death, get a professional appraisal as of that date, even if you plan to keep the house. It's much harder to reconstruct years later.

Property taxes are the other piece. In some states, a change in ownership triggers a reassessment, which can raise the annual bill quite a bit. California is the best-known example. Since Proposition 19, a child generally keeps the parent's lower assessed value only if they move in and use the home as their primary residence, and only up to a certain value. A tax professional can tell you how your state handles it.

Keep it, rent it, or sell it?

Once the legal side is moving, the real decision arrives. There's no right answer, and the money is only part of it.

Some people move in. It can make financial sense, especially if the mortgage is small or paid off. If you live there as your main home for at least two of the five years before selling, you may later qualify for the home sale exclusion of up to $250,000 of gain ($500,000 for married couples), on top of the stepped-up basis.

Others rent it out. That can create steady income and keep the house in the family, but you become a landlord, with everything that comes with it: repairs, tenants, insurance changes, and rental income on your tax return. Be honest about whether you want that job, and whether the house needs work before anyone could live there.

Selling is the most common choice, and there's nothing disloyal about it. Selling soon after the death usually keeps capital gains small because of the step-up. Many families do a careful pass through the belongings first, keeping a few things with stories attached and donating or selling the rest. The approach in our guide to Swedish death cleaning can make that easier, even when you're the one doing it for someone else.

Whichever way you lean, add up what the house costs to hold each month before deciding. Mortgage, property tax, insurance, utilities, and basic upkeep can easily run a couple thousand dollars a month, and that money comes from the estate or from you while everyone thinks it over.

When you inherit a house with siblings

Inheriting a house with siblings is one of the most common sources of family conflict after a death. Usually it's not really about the house. One person grew up in that bedroom and can't imagine strangers living there. Another lives three states away and needs the money. A third did most of the caregiving and quietly feels owed.

Take Priya and her two brothers. Their mother left the house to all three equally. Priya wanted to keep it as a family place, one brother wanted to sell immediately, and the other didn't say much at all. What finally helped was an appraisal and a single dinner where they wrote down the actual numbers. Priya realized she couldn't afford to buy them both out. The house was listed that spring, and before closing they each picked one room's worth of things to keep. She still has the kitchen table.

Co-owners generally have a few options. One sibling can buy out the others at the appraised value, sometimes using a refinance. Everyone can agree to sell and split the proceeds after costs. Or the siblings can keep it together, which works best with a written agreement covering who pays what, who can use the house, and what happens if someone wants out later.

If nobody can agree, any co-owner can usually ask a court for a partition, which often ends in a forced sale at a lower price, with legal fees on top. A family mediator is cheaper and much easier on the relationships. If things feel tense, our guide to writing a letter to siblings after a parent's death might help you say what you mean before the conversation starts.

Making it easier for the people who'll inherit your home

When Marcus went back to his father's house a few months later, he kept thinking that most of what made the first weeks hard wasn't the grief, which he expected. It was not knowing things. Which insurance company? Was there still a mortgage? Did his dad want the house kept in the family, or did he just assume the kids would sell it? Nobody had asked him, and he'd never said.

If you own a home, you can spare your family some of that. Check how your deed is titled, and look into whether your state allows a transfer-on-death deed or whether a trust makes more sense for you. Keep the deed, mortgage details, and insurance information somewhere your executor can find them. And if you have feelings about the house itself, whether you'd love for a grandchild to raise kids there or you'd honestly prefer everyone sell it and not feel guilty, write that down. It can settle an argument before it starts.

I'd suggest putting all of that in When I Die Files: where the deed is, who holds the mortgage, and a note to your kids about what the house has meant to you and what you hope they'll do with it. They'll still have decisions to make, but they won't be guessing what you would have wanted.