On this page
- How does the building reach you?
- Should you keep it, sell it, or buy out the other heirs?
- What is the step-up in basis?
- Will the building be reassessed?
- Who runs the building until you decide?
- What if the heirs disagree?
- What does selling an inherited building look like?
- When should you call an estate attorney or a CPA?
- A building comes to heirs through probate, a living trust, a joint tenancy or a transfer to a surviving spouse. Each route has its own paperwork and moves at its own speed.
- Your income tax basis is generally the building's value on the date of death, under Internal Revenue Code section 1014, so a sale soon afterward may carry little taxable gain.
- Plan on a reassessment when a parent leaves a rental building to a child. Since February 16, 2021, Prop 19 has kept the parent-child exclusion only for a family home or a family farm.
- Heirs who cannot agree can end up in a partition case, which any co-owner can file. If one of them asks for a sale, California's Partition of Real Property Act gives the others the first chance to buy that share, at a value the court sets.
How does the building reach you?
It reaches you by the route the owner's title set up, and the most recent recorded deed tells you which route that is. Read the vesting, the words right after the owner's name. Then find the row below that matches.
| How it was held | Who acts first | The first formal step |
|---|---|---|
| In the owner's name alone, passing by will or without one | A personal representative the probate court appoints | A petition to the Superior Court, then letters |
| In a living trust | The successor trustee named in the trust | A notification to beneficiaries and heirs under Probate Code section 16061.7 |
| As joint tenants | The surviving joint tenant | Recording an affidavit of death under Probate Code section 210 |
| As a married couple, passing to the surviving spouse | The surviving spouse | No administration if Probate Code section 13500 applies, or a spousal property petition to confirm it |
A building in the owner's name alone, with no trust, joint tenant or spouse to receive it, normally goes through probate. Nobody can act for the estate until the court issues letters, and Probate Code section 8400 says that holds even for the executor the will names. When the case ends, the building is distributed to the heirs, unless the personal representative has sold it and the heirs share the money instead.
If the building was in a living trust, the successor trustee runs it under the trust's terms. The death made the trust irrevocable, and the trustee now owes each beneficiary and each heir a notification. That notice has to warn you about the deadline to contest the trust. You have 120 days after the notice is served on you, or 60 days after a copy of the trust's terms reaches you if it arrives within those 120 days, whichever ends later. Write down the day the notice reached you.
A surviving joint tenant clears the record by recording an affidavit of death in the county where the building sits. Probate Code section 210 says what goes in it, a description of the property and a certified copy of the death record.
Property that passes to a surviving spouse, under a will or without one, needs no administration under Probate Code section 13500. A spouse who wants a court order confirming that can file a spousal property petition, form DE-221, under section 13650.
When the building goes to several children, they own it together, each with a fractional share. Every decision after that needs all of them.
Should you keep it, sell it, or buy out the other heirs?
That turns on your tax basis, the property tax bill after reassessment, the rent the law allows on each unit, and what the building would sell for now. The inheritance changes the first two. The rent rules stay with the units, whoever owns them.
| Option | What works in its favor | What to check first |
|---|---|---|
| Keep it | Rental income, and depreciation that starts over from the stepped-up basis | The reassessed property tax, the rent rules on each unit, who will manage it, and whether every co-owner wants to hold |
| Sell it | With a stepped-up basis, a prompt sale may show little taxable gain, and cash divides cleanly among heirs | Timing under the probate or trust process, transfer taxes, and a price the rent roll supports |
| Buy out the other heirs | One heir keeps the building and the others are paid for their shares | How the value is set, how the buyout is financed, and how the Assessor will treat the share you buy |
Inside Los Angeles city limits, the Rent Stabilization Ordinance applies to rental units with a certificate of occupancy dated no later than October 1, 1978. For the twelve months that began July 1, 2026, LAHD allows those units a 3 percent increase. If the plan is to keep the building for its income, look up each unit before counting on higher rents. Run those numbers with the reassessed tax bill, because the tax can rise in the same year the rents are held to 3 percent.
Outside the City of Los Angeles, find out whether the building's own city has a rent program.
What is the step-up in basis?
The step-up resets your starting point in the building, for income tax, to what it was worth on the day the owner died. Internal Revenue Code section 1014 sets the basis of property acquired from a decedent at its fair market value on the date of death, with some exceptions. If the executor files a federal estate tax return and elects the alternate valuation date on it, the value on that date is used instead.
Take made-up round numbers. Your parent's adjusted basis was $400,000, and the building was worth $2,500,000 on the date of death. Your basis is $2,500,000. Sell for $2,550,000 and the gain, before selling costs, is measured from $2,500,000 instead of from $400,000. The IRS also treats inherited property as held for more than a year, however soon you sell. The gain is long-term.
How your parents held title matters too. If the building was community property, both halves can take a new basis at the first spouse's death, as long as at least half is includible in that spouse's estate. If they held it as joint tenants, only the half belonging to the spouse who died is reset. Depreciation starts over from the new basis as well, and a sale soon after inheriting may leave too little gain for a 1031 exchange to be worth its deadlines.
Will the building be reassessed?
Expect the Assessor to reassess an apartment building that passes from a parent to a child. For transfers on or after February 16, 2021, Proposition 19 kept the parent-child exclusion only for a family farm or a family home, meaning the parent's principal residence that becomes the child's principal residence. The Board of Equalization says a rental home passing between parents and children does not qualify. Apartment units are rentals.
A home that does qualify is protected only up to a cap, its taxable value at the transfer plus an adjusted amount the BOE publishes. For transfers from February 16, 2025 through February 15, 2027, that amount is $1,044,586, and any market value above the cap is added to the taxable value.
A surviving spouse is treated differently. Property passing between spouses, including at a death, is excluded from reassessment, and the LA County Assessor asks for no claim form.
Every route shares one filing. The Assessor needs a change in ownership statement, form BOE-502-D, within 150 days after the date of death, or in a probate, no later than the inventory and appraisal. If a child means to live in the building, look at the family-home claim and its deadline before any sale, because that claim has to be filed before the property passes to a third party.
Who runs the building until you decide?
Until the estate or the trust closes, the personal representative or the trustee runs it, and an heir who is neither should send requests through that person. Once title passes to the heirs, they run it together.
Whoever is running it steps into the landlord's duties, and some of them run on a clock:
- Tell the tenants who is in charge. Civil Code section 1962 gives a successor owner or manager 15 days to tell tenants the name, phone number and address of the manager, of the person who accepts legal notices, and of the person rent is paid to.
- Settle the security deposits. Under Civil Code section 1950.5, the outgoing owner either passes each deposit's balance to the new owner and notifies the tenant, or refunds it to the tenant with an accounting. When neither happens, the new owner is liable for the deposits along with the old one.
- Keep the LAHD registration current. The City of Los Angeles requires every residential rental unit to be registered each year, RSO units need a Rent Registry filing by the end of February, and a new owner has 45 days after recording to register.
The same weeks bring the insurance policy, the utility accounts and a bank account for the rent, and each of those needs someone with authority to sign.
What if the heirs disagree?
Heirs who disagree can still settle it themselves, with a buyout or a sale they all sign. If that fails, any co-owner of real property can file a partition action under Code of Civil Procedure section 872.210. Section 872.820 then has the court order a sale and divide the proceeds when the owners agree to one or when a sale would be more equitable than dividing the property.
A partition case filed on or after January 1, 2023 runs under California's Partition of Real Property Act. The court first fixes the building's value, normally by ordering an appraisal, though it must adopt a value that all the co-owners agree on. Then, if any co-owner asked for a sale, the others have 45 days after the court's notice to elect to buy out the ones who asked, at that value times each share. Heirs can use the same arithmetic in a buyout they agree on themselves, without the time and cost of a case.
What does selling an inherited building look like?
An inherited building is listed, shown with notice to the tenants and sold occupied, with the leases and deposits handled at closing, the same as any rental building. What changes is who signs, and when.
- In a probate, the personal representative signs. Depending on the authority the court granted, the sale goes through a notice to the heirs or through a court confirmation hearing.
- In a trust, the successor trustee signs under the powers the trust gives.
- Once the heirs hold title, every co-owner signs, so the family has to agree before anything is listed.
A large sale inside the City of Los Angeles may also owe Measure ULA. For a transfer on or after July 1, 2026, the rate is 4 percent when the consideration is above $5,400,000 and 5.5 percent when it is $10,900,000 or more, according to the City's Office of Finance, and once a price crosses a threshold, the rate applies to the entire price. A price just over a threshold can leave the heirs with less than one just under it, so the thresholds belong in the pricing discussion.
Shaya Lowenstein's part is the market. He can tell you what the building should bring with its current rents and leases, plan showings the tenants can live with, and run the sale so that the personal representative, the trustee or every heir can accept the same offer. He works for the seller and does not buy buildings himself.
When should you call an estate attorney or a CPA?
Call both before the building is listed. Each one answers questions that change whether and how you sell. An estate attorney is the one to ask about how title passes, a will or trust whose wording is unclear, a co-heir who will not cooperate, or a partition case. A CPA is the one to ask about your basis, depreciation, a 1031 exchange, and what keeping the building would cost in tax compared with selling it. Shaya is a real estate agent and can give neither kind of advice, but he can give both of them the current estimate of value they will ask for. Bring each of them the deed, the trust or will, and the rent roll as well.