Questions sellers ask Should I sell my longtime home—or leave it to my children?

A home you love. A question worth exploring.

After decades in the same home, there is a lot to value: familiar neighbors, a garden you have shaped, rooms full of memories, and the comfort of knowing your community.

There may also be things you would welcome less of. Fewer repairs to arrange. Less space to maintain. Fewer decisions about what the house needs next.

Considering a change does not mean you have to make one. It means giving yourself a clear picture of your choices while you have time to consider them.

For many Palo Alto homeowners, the question is: How can this home best support the years ahead—and the people I care about?

Start with your plans, then look at the numbers

Would you like to stay in Palo Alto in a smaller home? Move closer to children or grandchildren? Have more flexibility for travel or future care? Or stay exactly where you are, with more help managing the property?

Each choice deserves a realistic budget. Compare the cost of staying with the cost of the life you would choose after a sale, including housing, moving, ongoing expenses, and a comfortable reserve.

A sale price alone cannot answer that question. Neither can a tax estimate without a plan for what comes next.

The tax question that can change the conversation

Taxable gain is generally based on the sale price, less eligible selling expenses, your adjusted tax basis, and any home-sale exclusion you qualify for. Your basis may include qualifying improvements—not just the original purchase price. [1]

If you have lost a spouse, ask your CPA to review the ownership history before estimating the tax. Qualifying California community property may receive a basis adjustment on both spouses’ interests at the first spouse’s death. That can substantially change the calculation. [2]

A qualifying surviving spouse may also be eligible for the larger $500,000 home-sale exclusion when selling within two years of the spouse’s death, provided the other requirements are met. [1]

This is why I would not want you making a decision around someone else’s tax bill. Two neighbors with similarly valued homes can have very different results.

I can help establish a likely selling range and the preparation and selling costs. Your CPA can use that information to estimate what you would retain after taxes and any loan payoff. Together, those numbers make the options much easier to compare.

What would inheriting the home mean for your children?

Inherited property generally receives a tax basis tied to its fair market value at death. A sale soon afterward may therefore produce little taxable gain. Exceptions apply, and estate taxes are a separate question. [2]

For 2026, the federal basic estate and gift tax exclusion is $15 million per person. Whether it applies depends on the broader estate and prior taxable gifts, not just the value of this house. [3]

Property taxes need their own review. Under California’s Proposition 19, children do not automatically receive a parent’s low property-tax assessment. A qualifying child must make the inherited family home a principal residence and satisfy the exemption and claim requirements. Even then, the exclusion has a value limit, so the assessment may rise substantially. [4]

Before making the house the centerpiece of an inheritance plan, it helps to ask:

• Would any of your children want to live here?
• If several children inherit, would they keep it together, buy one another out, or sell?
• What would ownership cost them in property taxes, insurance, maintenance, and repairs?
• Is leaving this particular home important to you, or is your broader goal to provide financial support?

These conversations can clarify what preserving the house would actually accomplish for your family.

There may be a middle path

You do not have to choose between staying indefinitely and making an immediate move.

You might explore smaller homes nearby before deciding. You might remain at home with a plan for maintenance and support. Or you might prepare gradually for a move a year or two from now.

For eligible California homeowners age 55 or older, Proposition 19 may allow a property-tax base transfer to a replacement primary residence, subject to timing, value, and filing rules. It does not necessarily preserve the exact same tax bill, and it does not eliminate capital-gains tax. [4]

The useful first step is to compare a few real possibilities. What would each cost? What would become easier? What would you miss?

Check benefits before choosing a sale date

If you receive Medicare, Medi-Cal, or Social Security, include a benefits review in the planning process. These programs have different rules.

Medicare: how a large gain can affect your premiums

A large taxable gain can increase Medicare Part B and Part D premiums, generally two years later. A 2026 sale would ordinarily affect 2028 premiums; the actual surcharge depends on that year’s rates and rules. [5]

A one-time gain typically affects one premium year, but later premiums depend on later income. A voluntary property sale alone is not a qualifying life-changing event for relief. You still have appeal rights, including when the determination uses incorrect information. [5] [6]

Medi-Cal: why sale proceeds need a review before you list

A home and cash from selling it can receive different treatment. Asset limits returned in 2026 for certain Medi-Cal groups, including many older adults. A sale may affect eligibility, and replacement-home proceeds require careful review. [7]

Before listing, ask a qualified benefits specialist or elder-law attorney to review your coverage, household circumstances, and applicable deadlines. Confirm current rules with the county Medi-Cal office. Do not assume that buying another home will automatically preserve eligibility.

Social Security: how a gain affects the taxable share of benefits

A taxable gain can increase the portion of Social Security benefits subject to federal income tax, up to 85% of benefits. That is the share included in taxable income—not an 85% tax rate. [8]

Your comfort belongs in the plan, too

Wanting to leave something meaningful to your children is understandable. So is wanting a home that suits your life today.

The conversation can make room for both. You may decide that staying is exactly right. You may find that selling offers worthwhile flexibility, even after taxes. Or you may simply want a plan ready for whenever your preferences change.

You do not need a listing date to begin.

Let’s start with your home and your options

If you are considering what comes next, I can help you understand your home’s likely selling range, which improvements may be worthwhile, and what the preparation and sale would involve.

That gives you something concrete to discuss with your CPA, estate-planning attorney, and family. If you decide to sell, I can also coordinate the preparation and staging so you do not have to manage every detail yourself.

Sources

1. IRS, Publication 523, Selling Your Home: irs.gov/publications/p523
2. IRS, Publication 551, Basis of Assets: irs.gov/publications/p551
3. IRS, Instructions for Form 706 (2026): irs.gov/instructions/i706
4. California Board of Equalization, Proposition 19: boe.ca.gov/prop19
5. Social Security Administration, Medicare Premiums: Rules for Higher-Income Beneficiaries: ssa.gov/benefits/medicare/medicare-premiums.html
6. Social Security Administration, POMS HI 01120.005, Life-Changing Events: secure.ssa.gov/poms.nsf/lnx/0601120005
7. California DHCS, Medi-Cal rules and help: dhcs.ca.gov/medi-cal/help; January 5, 2026 update: dhcs.ca.gov/newsroom-office-of-communications/january-5-2026
8. IRS, Publication 915, Social Security and Equivalent Railroad Retirement Benefits: irs.gov/publications/p915