More People Are Inheriting Their Homes

See In California, About the Only Way to Get a House Is to Inherit One: Nearly one out of every five property transfers last year was made through inheritance, a record for the state and double the national share by Nicole Friedman and Veronica Dagher of The WSJ. Excerpts:

"About 18% of all property transfers in the state last year, representing nearly 60,000 homes, were made through inheritance"

"That share is a record for California in data going back to 1995, up from 12% in 2019. It is also roughly double the national share of 8.8% last year."

There are "tax policies that encourage owners to avoid selling their houses before they die."

"The people who inherit these houses . . .  can sell them and keep the proceeds without having to pay capital-gains taxes."

"Longtime owners pay taxes based on decades-old valuations. New buyers are taxed at much higher current market valuations."

"Federal law allows a $250,000 exclusion ($500,000 for couples) for homeowners selling their primary residences. With many California homes now worth millions, homeowners often have gains that far exceed these limits."

"If the home is inherited, its value for tax purposes resets to its market price on the date of death. For a home that appreciated from $200,000 to $2 million, the heir could save more than $500,000 in federal and state taxes"