When one sibling wants to keep the inherited home and buy out the others, here is what each person actually owes or receives.
Use an appraised value or realistic sale estimate. Do not use the county assessed value.
Enter 0 if the property is owned free and clear.
Include any title fees, escrow, needed repairs before or at close. Enter 0 to skip.
Enter each heir's name and their percentage share. Shares must total 100%.
The heir keeping the home. They will pay the others their shares.
A sibling buyout is often the cleanest solution when one heir wants to keep an inherited home and others prefer cash. The math is straightforward, but families frequently miss important details that change the actual amounts owed.
Get the value right. A CMA from an agent is a starting point, but a formal appraisal is often better for buyouts. If siblings disagree on value, they may agree to average two independent appraisals or use a probate referee valuation.
Confirm the mortgage payoff. The current balance shown on the mortgage statement is not the payoff amount. Call the lender and request an official payoff statement, which includes accrued interest and any prepayment fees.
Account for costs. If repairs are needed to make the property safe or refinanceable, or if title, escrow, and recording fees will hit, those should reduce the equity being divided.
Under California's Proposition 19, if the keeper is a child of the decedent and moves into the property as their principal residence within 12 months, the parent's assessed value can typically be preserved (subject to the value exclusion cap). This can save thousands per year in property tax. File Forms BOE-19-P and BOE-19-B with the county assessor.
If the keeper is not the parent's child, or does not intend to occupy the home, the property will likely be reassessed to current market value.
The keeper typically needs to either refinance the property in their own name (paying off the existing mortgage and cashing out enough to pay the other heirs), or take a probate-specific bridge loan, or negotiate a promissory note with the siblings.
Refinance qualification depends on the keeper's income, credit, and the property's appraised value. Not everyone qualifies for a large enough loan to complete a buyout.
Several factors affect real buyouts that this simple calculator does not include.
Stepped-up cost basis for capital gains. When the property is later sold by the keeper, the tax basis for capital gains is generally the fair market value at date of death, not the parent's original purchase price. This substantially reduces future capital gains tax exposure and is a real financial benefit that goes to the keeper.
Reverse mortgages. If the deceased parent had a reverse mortgage, the payoff can be substantial and complicates the buyout math.
Non-financial contributions. Some families agree to adjustments for care provided to the parent before death, contributions to home maintenance, or forbearance from other estate assets.
Trust or probate constraints. If the property is in a trust or probate estate, the sale or buyout may require trustee approval, court approval, or specific procedures. This calculator assumes the transfer to heirs has already happened and the family is settling among themselves.
Wolf Allies connects families with agents experienced in trust, probate, and inherited property transactions. We can also help you find lenders who specialize in inheritance buyouts.
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