As we navigate the tax landscape of 2026, the “Step-up in Basis” remains the most powerful financial benefit for heirs of San Diego real estate. When a property is inherited, its “tax basis” is adjusted to the fair market value on the date of the decedent’s death. This means if the heirs sell the property shortly after, they pay little to no capital gains tax on decades of appreciation.

 

However, in 2026, California has introduced new reporting requirements that make the timing and documentation of the date-of-death appraisal more critical than ever. Heirs who fail to get a professional, court-standard appraisal immediately upon the owner’s passing may find themselves in a difficult battle with the FTB (Franchise Tax Board) over the exact value, potentially costing them thousands in unnecessary taxes.

 

We provide attorneys and their clients with “Tax-Ready BPOs” (Broker Price Opinions) that are specifically designed to establish this basis for both federal and state authorities. We don’t just give a “suggested list price”; we provide a detailed, historical market analysis that justifies the valuation to the IRS and the state of California.

 

For families considering keeping the inherited property as a rental, we provide a 2026 “Hold vs. Sell” analysis. This looks at the new San Diego rental laws and property tax reassessments under Prop 19 to determine if the property will actually be profitable for the next generation. Our goal is to ensure that the real estate portion of the estate plan is as tax-efficient as possible.

 

Need to establish the “Step-up in Basis” for an inherited property? Let’s get you a professional valuation. The first consultation is free, and our Mobile Notary Service is ready to help with your tax documents.