If you’ve recently inherited property in Ventura, CA, you’re probably wondering what taxes apply. Here’s the short version:
California does not have an inheritance or estate tax.
Federal estate tax only applies to very large estates (over $13 million in 2024).
Capital gains tax only applies if you sell the inherited asset, but the step-up in basis rule usually reduces or eliminates this tax.
Inherited IRAs or 401(k)s can create taxable income as distributions occur.
Working with a Ventura estate planning attorney ensures you don’t pay unnecessary taxes — and that your inheritance passes smoothly.
Why Understanding Inherited Property Taxes Matters
Inheriting a home, investments, or cash can feel like a blessing — but it can also bring financial uncertainty. Many Ventura families are surprised to learn that while California offers strong protections for heirs, there are still federal and income tax issues to plan for.
Knowing what’s taxable (and what’s not) helps you:
Avoid costly mistakes when selling inherited real estate.
Time your transactions for tax efficiency.
Keep your inheritance compliant with state and federal rules.
Estate planning decisions—especially those involving property, taxes, or legal authority—can quickly become complex. Many families come to us after realizing too late that small mistakes can have major consequences. Getting guidance early can help you avoid unnecessary stress and protect your family long-term.
1. Estate Tax: When the Federal Government Steps In
An estate tax is a federal tax on the total value of someone’s estate when they pass away — including real estate, cash, investments, and personal property.
✅ The Basics
Who pays: The estate (not the heirs).
Threshold: Only estates worth more than $13.61 million (2024) are taxed federally.
Rate: Between 18% and 40% depending on estate size.
Since California does not have a state estate tax, most Ventura families will not owe this tax. However, if the decedent lived or owned property in another state (like Oregon, Washington, or New York), the estate may still face those states’ estate taxes.
(External source: IRS Estate and Gift Tax Overview)
2. Inheritance Tax: What Heirs Pay in Some States
An inheritance tax is paid by the beneficiary (not the estate) — but California does not impose this tax.
If the person who passed away lived or owned property in another state, you may still owe inheritance tax in that state.
States That Still Have Inheritance Tax
Maryland
New Jersey
Kentucky
Pennsylvania
Nebraska
Ventura note: For California residents, this section is mostly good news — your inheritance is generally free of state-level taxes.
3. Capital Gains Tax: When You Sell Inherited Property
If you decide to sell inherited real estate, you may owe capital gains tax on the difference between the property’s value at the time of inheritance and its sale price.
💡 The “Step-Up in Basis” Advantage
When you inherit property, its tax basis “steps up” to the fair market value on the date of death.
That means you only pay tax on gains made after you inherited it.
Example:
Your father bought a Ventura home for $200,000. At his passing, it’s worth $900,000. If you sell it soon after for $910,000, your taxable gain is just $10,000, not $710,000.
✅ Who Benefits
Reduces taxable gains for heirs.
Applies to most real estate, investments, and personal assets.
Managed properly through a trust or estate plan, it can save heirs thousands.
(External source: IRS Publication 551 – Basis of Assets)
4. Inherited Retirement Accounts: Hidden Tax Traps
Inherited IRAs and 401(k)s come with their own federal tax rules.
Spouses can often roll over the account and continue tax deferral.
Non-spouse beneficiaries must usually withdraw the full amount within 10 years, according to the SECURE Act.
These withdrawals are taxed as income, not capital gains.
5. Local Note: Ventura Probate and Estate Administration
If your loved one’s assets were not held in a trust, the estate may go through probate in Ventura County Superior Court.
Probate ensures assets are legally transferred, but it can be time-consuming and costly.
A revocable living trust can help you avoid this process entirely — saving months and thousands of dollars.
FAQs (Add FAQ Schema Here)
Do I owe California inheritance tax?
No. California repealed its inheritance tax decades ago. You may owe tax only if the deceased lived in another state that still charges it.
What is the step-up in basis rule?
The “step-up in basis” adjusts the property’s taxable value to its fair market value at death, reducing potential capital gains when sold.
Are inherited IRAs taxable?
Yes — distributions from inherited IRAs or 401(k)s are subject to income tax. Non-spouse heirs usually must withdraw funds within 10 years.
How can I avoid probate in California?
Create a revocable living trust. Assets inside a trust bypass probate, saving time and legal fees.
Talk to a Ventura Estate Planning Attorney
If you’ve inherited property or expect to soon, Hermance Law can help you:
Understand potential tax exposure before you sell.
Use trusts and step-up strategies to preserve wealth.
Navigate Ventura probate if necessary.
If you’re dealing with estate planning decisions in California, our team can help you navigate the process with clarity and confidence. Schedule a Free Consultation to make sure everything is set up the right way for your family
Or 📞 Call (805) 307-5019
We proudly serve Ventura, Oxnard, Camarillo, and all of Southern California.
By Attorney Crista Hermance — Estate Planning Lawyer and Founder of Hermance Law.
Crista has over 15 years of experience helping Ventura families with inheritance tax planning, trust creation, and probate avoidance.
