Will I owe capital gains tax if I sell?
Often less than people expect. The IRS says the basis of inherited property is generally its fair market value on the date of death. So the gain is measured from that value, not from what your parents paid decades ago.
The gain is measured from $700,000: about $15,000 before selling costs, not $505,000.
Selling costs and other details change the final number. One exception the IRS lists: if you or your spouse gave the home to the person within a year before they died and it comes back to you or your spouse, the step up does not apply.
Source: IRS Publication 551, Basis of Assets.
How is the date of death value set?
In a probate, the court's probate referee appraises the house. Outside probate, for example in a trust, a licensed appraiser can do a formal date of death appraisal. Either way, I can pull the MetroList sales around that date so your CPA can see what similar Folsom homes sold for.
Source: Probate Code 8902.
Will the property taxes go up if I keep it?
Under Prop 19, a parent's family home can pass to a child without a full reassessment if it was the parent's main home and the child makes it their main home and files for the homeowners' exemption within one year. The exclusion has a cap.
| Prop 19 rule | What it says |
|---|---|
| Cap for transfers Feb 16, 2025 to Feb 15, 2027 | The parent's taxable value plus $1,044,586 |
| Who qualifies | The home was the parent's main home, and the child makes it their main home and files for the homeowners' or disabled veterans' exemption within one year |
| Claim deadline | Within three years of the transfer, before the home is sold to someone else, or before the child stops living there, whichever comes first, on form BOE-19-P. A late claim can still get the exclusion going forward if the home hasn't been sold. |
| Kept as a rental or second home | Expect it to be reassessed |
Sources: State Board of Equalization, 2025 Prop 19 amount; Revenue and Taxation Code 63.2; State Board of Equalization, Proposition 19.
Where does the Prop 19 claim go?
For a Folsom home, the Sacramento County Assessor. Ask the assessor's office or your attorney for the current form before you count on the exclusion.