What to do with a house after someone dies

Who decides what happens to the house?

The person or people named in the will, trust, or state law as inheritors of the house decide what happens to it. If the house was in a trust, the successor trustee manages it on behalf of the beneficiaries. If it passes through probate (the court process that settles an estate), the probate court oversees the process, but the heirs or beneficiaries still direct the major decisions.

As the executor, you do not own the house and cannot unilaterally sell it, rent it, or give it away—even if you think that's best. Your job is to preserve it, pay its bills, and eventually transfer it to whoever inherits it (or follow the court's or trust's instructions if a sale is needed to pay debts or taxes). If multiple people inherit it, they must agree on what to do, or a court may need to intervene.

Your role is steward, not owner. You manage it; the heirs decide its fate.

What if the heirs want to keep the house?

Keeping the house is often the default—emotionally, it feels like the safest choice. But it carries real costs: property taxes, insurance, utilities, maintenance, and repairs. Someone will need to live in it, rent it out to generate income, or accept that it sits vacant (which accelerates deterioration and carries liability risk).

If one heir wants to keep it and others want to sell or divide the proceeds, this becomes a negotiation. Sometimes one heir buys out the others' shares at fair market value; sometimes the house is sold and the proceeds split. If heirs cannot agree, a partition action (a court process) may be needed—expensive and slow, so mediation is usually wiser.

• Property taxes and insurance continue immediately, whether the house is occupied or not
• Maintenance deferred now becomes expensive later; a vacant house deteriorates fast
• If one heir keeps it, other heirs may expect compensation for their inherited share of its value
• Renting it out requires landlord licensing, tenant screening, and ongoing management—or a property manager's fee

Should you sell the house, and when?

Selling is often simpler than keeping it, especially if heirs live in different places or need cash to settle the estate's debts and taxes. But timing matters for taxes. If the house is sold soon after the person dies, heirs typically benefit from what's called a "step-up in basis"—a tax rule that resets the house's value to its fair market value on the date of death, not its value when the original owner bought it. This means if the house was bought for $100,000 and is worth $400,000 at death, heirs who sell it shortly after inherit it at the $400,000 value, and capital gains tax applies only to appreciation after death.

Holding the house for years before selling can erode this tax advantage, especially if the real estate market rises. You'll want to discuss timing with the estate's CPA or tax advisor, particularly if the deceased owned it for decades and bought it cheaply. Probate is state law, and timelines vary widely, but a typical sale can happen within months of death if there are no complications and heirs agree.

• Selling usually requires the house to pass through probate or be transferred from the trust to the heirs first—this takes time but is standard
• Real estate agent commissions (typically 5–6% of sale price) and closing costs reduce net proceeds
• If the house was mortgaged, the loan must be paid off at closing from sale proceeds
• Immediate or near-term sale preserves the step-up in basis tax advantage for heirs

Selling within a few months of death often gives heirs the best tax outcome.

What about renting the house out?

Renting can generate income for the estate or heirs, but it transforms you (or them) into landlords. This means tenant screening, lease drafting, rent collection, maintenance coordination, and handling disputes—or paying a property manager 8–12% of monthly rent to do it. The house also becomes a business asset, subject to income tax on rent collected and depreciation rules that can complicate later sale.

Renting is often a holding pattern—a way to generate income while heirs decide whether to keep the house long-term or wait for a better market to sell. But it requires active management and carries landlord liability (if a tenant is injured on the property, for example). Discuss this with the estate's CPA, as rental income is taxable and the estate may owe estimated taxes.

What are the main costs and taxes involved?

The ongoing costs are straightforward: property tax (due annually or semi-annually), homeowners insurance, utilities if the house is occupied or maintained, and repairs or maintenance. These are paid from the estate's funds while you hold it, or by the new owner once it's transferred.

Taxes on the eventual sale depend on timing and basis. If sold soon after death, heirs benefit from the step-up. If held for years and then sold at a profit, capital gains tax applies to appreciation after death. The estate itself may owe income tax on rental income if the house is rented, and state inheritance or estate taxes apply in some states (federal estate tax applies only to very large estates—over $15 million per person in 2026, per the IRS). Consult your CPA or the estate's tax advisor; these rules are complex and state-specific.

• Property tax and insurance are ongoing costs that do not stop when someone dies
• Selling costs include real estate commissions, title insurance, and closing costs—typically 7–10% of sale price total
• Renting generates taxable income and may trigger depreciation recapture tax when the house is eventually sold
• The step-up in basis usually applies to all inherited property, not just houses—ask your CPA about the full picture

What should you do right now?

First, stabilize the house: make sure the property tax and insurance are paid, secure it (change locks if needed), and arrange basic maintenance so it doesn't deteriorate. You do not need to make a final decision about selling, renting, or keeping it this month.

Second, gather information. Get a recent appraisal or comparative market analysis from a real estate agent; this tells you what the house is worth and informs heirs' discussions. If there is a mortgage, get the loan details and payoff amount. Meet with the heirs (if there are multiple) to understand what each person wants. Then consult the estate's CPA or tax advisor about the tax implications of each path, and your attorney if heirs disagree or if the house is complicated (a rental property, a business property, or out of state).