The family home after your spouse dies: what California law gives you, and what it asks of you
One page, in plain English, so you can see the whole picture at whatever hour you happen to be awake. Most of what follows is not urgent. A few items have real deadlines, and those are gathered in one place so they are easy to find. Nothing here asks you to decide anything today.
Most of this can wait. A few things genuinely cannot.
I am sorry about your husband or wife.
Here is the honest shape of it. The house is probably the largest thing on your list, and it is also one of the least time-sensitive. California does not require you to sell it, refinance it, or decide anything about it this year. What the law does do is attach a handful of clocks to specific pieces of paperwork and a few tax choices. Those are worth knowing about now, mostly so you can stop wondering about them.
Things that can wait
- Selling the house. There is no legal deadline. There are tax windows, which is a different thing.
- Deciding where you will live. Most people who move after a death are glad they waited a while first.
- Clearing out the closets. Nobody's tax position depends on this.
- Talking to a real estate broker. Including me. This page is the useful part. The conversation can come later, or never.
Things with an actual clock
- Trustee notification to beneficiaries and heirs, if there is a revocable living trust — 60 days.
- The county change-in-ownership form, BOE-502-D — 150 days when there is no probate.
- Federal estate tax return, Form 706, if one is required at all — 9 months.
- The larger $500,000 home-sale exclusion — 2 years from the date of death.
- A Prop 19 base-year-value transfer, if you decide to move — 2 years between the two homes.
The full timeline, with the code sections, is further down this page.
California community property gets a 100% step-up in basis
This is the least-known and most valuable fact on the page, and it exists because California is a community property state.
Under IRC §1014(b)(6), your one-half share of community property is treated as though you acquired it from the spouse who died. The result: the full fair market value at the date of death becomes the basis of the entire property — not just your spouse's half. The condition is that at least half the community interest be includible in the decedent's gross estate, and IRS Publication 523 states this applies “whether or not the estate must file a return.” It is not a benefit reserved for large estates.
Why it matters here in particular: if the two of you bought in Santa Cruz, Aptos, Los Gatos or Sunnyvale decades ago, the original cost basis is small and the appreciation is very large. A full step-up resets the basis to today's value, and the taxable gain on a sale soon afterward is often close to nothing.
How title was held changes the answer
A home held as joint tenants with right of survivorship generally receives only a one-half step-up. Publication 523 uses this example:
| IRS Pub 523 example | Joint tenancy with right of survivorship | California community property |
|---|---|---|
| Adjusted basis before the death | $50,000 | $50,000 |
| Fair market value at date of death | $100,000 | $100,000 |
| Surviving spouse's new basis | $75,000 | $100,000 |
How title is held is consequential, and it is not a question for a website. Deeds in long marriages are often a patchwork — a refinance here, an old joint tenancy grant deed there, a transfer into a trust later on. What your deed actually says, what your trust says, and what that means for your basis is a question for your attorney or your CPA. I am a real estate broker. I can tell you what the recorded documents say and what the house is worth today. I cannot tell you how the tax law applies to your deed, and I will not pretend otherwise.
One thing worth doing early whatever you eventually decide: get the date-of-death value documented while the evidence is fresh. It costs nothing to have it in the file, and it is the number your CPA will ask for whether you sell next spring or in eight years.
The two-year $500,000 window, and the tacking rule that never expires
These two get mashed together on almost every real estate website. They are different provisions and they behave differently. Keeping them straight is the difference between a rushed decision and an informed one.
Rule one: the $500,000 window — IRC §121(b)(4)
An unmarried surviving spouse may use the full $500,000 exclusion when all three are true: the sale occurs not later than 2 years after the date of death; you have not remarried at the time of the sale; and you and your spouse met the §121(b)(2)(A) requirements immediately before the death.
The clock runs from the date of death, not from the end of the year of death. If your spouse died in February, the window closes in February two years later — not on December 31.
Rule two: tacking — IRC §121(d)(2)
Separately, and with no two-year limit at all, an unremarried surviving spouse may count the late spouse's period of ownership and use toward the two-of-five-year test.
So after two years you drop to the $250,000 exclusion — but you do not lose the tacking benefit. This is the distinction most sites get wrong, and getting it wrong leaves people feeling that everything ends at the two-year mark. It does not.
The underlying §121 rules, briefly
- $250,000 single, $500,000 married filing jointly. These amounts are not inflation-indexed and have not changed since 1997.
- Ownership and use test: owned and used as a principal residence for periods aggregating 2 years — 730 days, which need not be continuous — during the 5 years ending on the date of the sale.
- Once every two years. Under §121(b)(3), the exclusion is usable only once in any two-year period.
If you move into assisted living: IRC §121(d)(7). If you become physically or mentally incapable of self-care, and you owned and used the home as your principal residence for at least 1 year of the 5-year period, then time spent living in any state-licensed care facility — a nursing home included — counts toward the 2-year use requirement. This is a full exclusion under the ordinary rules, not a prorated one. It comes up often for surviving spouses, and people frequently assume the window has closed when it has not.
Whether any of this applies to your return is your CPA's call, not mine. What I can do is make sure the sale date, the settlement statement and the date-of-death value are documented cleanly enough that your CPA is not left guessing.
The Surviving Spouse’s Guide to the House
Four pages: the clocks that are actually running, the two federal rules that decide how much you keep, and a 90-day sequence you can take at your own pace.
Download the PDF — free, no form
Call or text. You get me, not an assistant, and there is no obligation attached to it.
What actually has a deadline
Everything below is measured from the date of death unless noted. Not everything people worry about belongs on this list — that is rather the point of the list.
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60 days — trustee notification, Probate Code §16061.7
If there is a revocable living trust, the successor trustee must serve notification on every beneficiary and every heir at law within 60 days of the event that triggers it — for a revocable trust, the settlor's death. Under §16061.8, recipients then have 120 days from service to contest, or 60 days from delivery of a copy of the trust terms — provided that delivery happens within the 120-day period — if that date lands later. If you are both the surviving spouse and the successor trustee, this is usually the first genuine deadline you face, and it is one to hand to your attorney rather than handle alone.
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150 days — BOE-502-D change in ownership statement, R&TC §480(b)
The Change in Ownership Statement, Death of Real Property Owner is due within 150 days of the date of death when there is no probate — and that includes all trust-held property. If the estate is probated, it is filed instead prior to or at the time the inventory and appraisal is filed with the court. It is required even for trust-held property, and even when no reassessment will result.
One correction, because this is widely misreported: the §482 penalty is not triggered by missing the 150 days. It is triggered by failing to file within 90 days after the assessor mails a written request. That penalty is $100 or 10% of the taxes on the new base year value, whichever is greater, capped at $5,000 for a home with the homeowners' exemption and $20,000 without it. The real exposure for filing late is different and larger: escape assessments going back up to eight prior rolls under R&TC §532(b)(2). File it — but do not let anyone frighten you about day 151.
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9 months — Form 706, if a federal estate tax return is required
Due 9 months after the date of death under IRC §6075(a), extendable by 6 months with Form 4768. For 2026 the federal estate tax exemption is $15,000,000 per person under IRC §2010(c)(3)(A) as amended by Pub. L. 119-21, so most families are nowhere near a filing requirement. This is also the deadline for making a portability election on a timely filed return.
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1 year — creditor claims, CCP §366.2
Claims against a person who has died are barred one year after the date of death. The bar is essentially untollable, and it reaches trust assets as well as probate assets. In practical terms, this is the point at which the financial picture stops being able to change on you.
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2 years — the $500,000 home-sale exclusion, IRC §121(b)(4)
Measured from the date of death, not from the end of that calendar year, and it requires that you have not remarried at the time of the sale. After this point the exclusion is $250,000 — but remember rule two above: the §121(d)(2) tacking of your spouse's ownership and use has no time limit and does not go away.
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2 years — the Prop 19 replacement home window
If you are 55 or older and want to carry your property tax base to another California home, the replacement must be purchased or newly built within 2 years of the sale of the original — in either direction. You may buy first and sell second, or sell first and buy second.
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5 years — late portability election, Rev. Proc. 2022-32
For estates not otherwise required to file, Rev. Proc. 2022-32 allows a portability-only election to be made late, within 5 years of the date of death, with no user fee. The return must be headed “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” Whether it is worth doing is a conversation with your CPA or estate attorney — but the fact that the door stays open for five years is worth knowing, because many people assume they missed it at nine months.
There is no 2026 sunset on the federal estate tax exemption. The previously scheduled reduction was repealed. If you come across an article warning that the exemption is about to be cut in half, it is out of date.
Prop 19 lets a homeowner 55+ take the tax base along
Some surviving spouses want to stay in the house. Some want to be nearer their children, or on one level, or simply somewhere that is not full of memories in every room. If you land in the second group, Prop 19 matters, because the property tax bill on a replacement home at today's prices would otherwise come as a shock.
Under Property Tax Rule 462.540 and R&TC §69.6, a homeowner 55 or older may transfer the home's factored base year value to a replacement primary residence anywhere in California, and may do it up to three times.
Who can claim it
Only the spouse who is 55 or older at the time the original home sells can be the claimant, and that spouse must be an owner of both the original and the replacement property. Age at the time of that sale is the test, so timing can matter if a birthday is close.
Timing and paperwork
The replacement must be purchased or newly built within 2 years of the sale, in either direction. Claim it on form BOE-19-B within 3 years of the purchase, filed with the assessor in the county where the replacement home is located — not the county you left.
The value test, and the part people misunderstand
Buying a more expensive home does not disqualify you. It adjusts the number. If the replacement's full cash value exceeds the applicable threshold — 100% of the original's full cash value if you bought before the sale, 105% if you bought in the first year after the sale, 110% if in the second year after — then only the excess over that threshold is added to the transferred base year value. Not the full difference between the two houses. That distinction is what makes moving up, or moving sideways into something newer and easier to live in, workable for a lot of people.
The full walk-through, with the forms, is on the Prop 19 guide. If part of the estate is still being administered, the trust and estate sales page and the deadline clock may be more useful first. If you are weighing a smaller place, there is also the downsizing guide.
Surviving spouse FAQ
Do I have to sell the house?
No. Nothing in California law requires a surviving spouse to sell the family home, and there is no deadline that forces the decision. Some tax benefits are time-limited, and those are listed on this page so you can see them, but a benefit expiring is not the same as an obligation. Plenty of people stay. Plenty of people wait a year and then decide. Both are fine.
How long do I have to sell and still use the $500,000 exclusion?
Under IRC §121(b)(4), an unmarried surviving spouse may use the full $500,000 exclusion if the sale happens not later than two years after the date of death, they have not remarried at the time of the sale, and the couple met the §121(b)(2)(A) requirements immediately before the death. The clock runs from the date of death itself — not from the end of the year of death. That detail matters if the death was early in a calendar year.
What happens if I sell after those two years?
The exclusion drops to $250,000, the single-filer amount. But you do not lose everything. IRC §121(d)(2) is a separate rule with no two-year limit: an unremarried surviving spouse may count the late spouse's period of ownership and use toward the two-of-five-year test. So the tacking benefit survives past the two-year mark even though the larger exclusion does not. Most websites blur these two rules together. They are separate.
Why does California community property matter so much here?
Because of IRC §1014(b)(6). For community property, the surviving spouse's one-half share is treated as having been acquired from the decedent, so the full fair market value at the date of death becomes the basis of the entire property — not just the decedent's half. The condition is that at least half the community interest is includible in the decedent's gross estate, and IRS Publication 523 says that applies “whether or not the estate must file a return.” For a long-held Bay Area or Santa Cruz County home, this is usually the single largest financial fact of the year.
We held title as joint tenants with right of survivorship. Is that different?
Yes, and the difference is real. A home held in joint tenancy with right of survivorship generally gets only a one-half step-up. IRS Publication 523's own example: a home with a $50,000 adjusted basis and a $100,000 fair market value at death leaves the joint-tenancy survivor with a $75,000 basis, versus $100,000 if the same home were California community property. How title is held is consequential. Whether your deed says what you think it says, and what if anything can be done about it, is a question for your attorney or CPA. It is not something this website — or a real estate broker — can advise you on.
The house was in our living trust. Do I still have to file something with the county?
Yes. The BOE-502-D Change in Ownership Statement, Death of Real Property Owner is required under R&TC §480(b) even for trust-held property and even when no reassessment will result. If there is no probate — which includes all trust-held property — it is due within 150 days of the date of death. If the estate is probated, it is filed instead prior to or at the time the inventory and appraisal is filed with the court. One correction to something you may read elsewhere: the §482 penalty is not triggered by missing the 150 days. It is triggered by failing to file within 90 days after the assessor mails a written request. The real exposure for filing late is escape assessments reaching back up to eight prior rolls under R&TC §532(b)(2).
I may be moving to assisted living. Does that ruin the two-of-five-year test?
Often it does not. IRC §121(d)(7) says that if you become physically or mentally incapable of self-care, and you owned and used the home as your principal residence for at least one year of the five-year period, then time spent living in any state-licensed care facility — including a nursing home — counts toward the two-year use requirement. It is a full exclusion under the normal rules, not a prorated one. This comes up constantly for surviving spouses, and it is worth raising with your CPA before anyone assumes the window has closed.
If I move, can I take our low property tax base with me?
Possibly. Under Prop 19 — Property Tax Rule 462.540 and R&TC §69.6 — a homeowner 55 or older may transfer the home's factored base year value to a replacement primary residence anywhere in California, up to three times. Only the spouse who is 55 or older at the time the original home sells can be the claimant, and that spouse must be an owner of both properties. The replacement must be purchased or newly built within two years of the sale, in either direction. You claim it on form BOE-19-B within three years of the purchase, filed with the assessor in the county where the replacement home is.
Will I owe federal estate tax?
For most families, no. The federal estate tax exemption for 2026 is $15,000,000 per person under IRC §2010(c)(3)(A) as amended by Pub. L. 119-21, indexed for inflation only for decedents dying after 2026. There is no 2026 sunset — the previously scheduled cliff was repealed, so you can ignore any article still warning that the exemption is about to be cut in half. Portability is a separate question: Form 706 is due nine months after the death under IRC §6075(a), extendable six months with Form 4768. For estates not otherwise required to file, Rev. Proc. 2022-32 allows a late portability-only election within five years of the date of death with no user fee. Your CPA or estate attorney decides whether that election is worth making.
The written version, yours right now
The Surviving Spouse’s Guide to the House — the four clocks that are actually running, the two federal rules that decide how much you keep, the things people worry about that turn out not to be problems, and a 90-day sequence you can go at your own pace. It downloads on the next page. Two fields, because you have enough to deal with.
No pressure to sell, no timeline, and no phone call unless you ask for one. If the honest answer is “stay put for now,” that is what I will tell you. I have said it plenty of times.
I am a real estate broker with a CFO background. I am not a CPA and not an attorney, and I do not give legal or tax advice. What I can do is get the property facts and the numbers straight so your professionals have something solid to work from.
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Please read this part. Everything on this page is general education about California and federal rules as they stand for 2026. It is not legal advice and not tax advice, and reading it does not create any professional relationship.
Lance Hulsey is a licensed California real estate broker — not a CPA and not an attorney. He does not prepare tax returns, does not give tax opinions, and does not advise on how title should be held or how a trust should be administered. Code sections are cited here so that you and your professionals can look them up, not so this page can stand in for them.
Your particular facts matter enormously: how title was held, what the trust says, the exact date of death, what is in the estate. Please consult your own attorney and your own CPA before acting on anything you have read here.
There is no rush. When you are ready, I am here.
Whether that is next month or in two years. The first conversation is information, not obligation, and it does not have to be about selling anything.
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