The “Silver Wave” takes form in real estate inheritance. How that could impact future finances

The “Silver Wave” takes form in real estate inheritance. How that could impact future finances

01.29.2025

Listen

·
The “Silver Wave” takes form in real estate inheritance. How that could impact future finances
The Silver Wave takes form in real estate inheritance revised

The Silver Wave is here: As Baby Boomers enter their senior years, they stand to leave significant assets to their heirs. Real estate is often the largest part of their legacies, as 75% of seniors want to age in place.

This decision is reshaping conversations about generational wealth transfer: Boomers are holding onto their homes versus downsizing for retirement capital, which means their beneficiaries may inherit a house rather than receive a check. 

Knowing what to do with an inherited home, and how it fits into a person’s broader financial picture, can help turn the wave into a windfall.

Happy at home

Baby Boomers, who are between 60 and 77 years old, are the largest segment of homeowners by generation in the United States. They also hold roughly half of the nation’s wealth — equating to $84 trillion in assets.1 This figure includes their homes: It’s estimated that $20 trillion of these assets are tied to real estate.2

Their home equity is positioned to increase as well. According to the Federal Housing Finance Agency, the median home value rose 74% between 2010 and 2022.3 The housing market’s current landscape — characterized by rising home values and limited inventory — amplifies the significance of inherited real estate.

As home prices rise, Boomers stand to leave a significant inheritance through real estate. Those who inherit a home from their parents may have a significant opportunity to increase their wealth, be it through home equity or by selling in a hot housing market.

Read more: Equity rich: How American homes built $30K-a-year in value

Inheriting opportunities

Inheriting a house can give some people a chance to become first-time homeowners. Forty percent of Americans own a home, and many view owning a home as a sign of financial success.

If the house’s mortgage is already paid off, the amount of money saved every month can make a difference. Americans pay an average of $2,715 for a 30-year fixed mortgage, and $3,552 for a 15-year fixed mortgage.4 

Love it or list it

Receiving real estate as inheritance can provide an opportunity to sell while the market is high. Homes across the U.S. now have $35 trillion in equity, and the average home costs $410,900 as of November 2024.5 Selling can be one way to take advantage of an active market, particularly if the home is out of state or requires significant renovations. 

There are tax considerations involved in selling an inherited home. Many relate to how the value of the home is calculated. The step-up in basis provision adjusts the property’s value to its fair-market value at the time of the original owner’s death. This means heirs, when they sell the property, do not get taxed on gains based on the original home price, but rather will be taxed on the gains between the stepped-up value and the selling price, which may represent a major savings come tax time. 

House money

Whether one chooses to keep or sell the home, it’s important to factor a few financials into the mix. So long as the home is in the possession of the beneficiary, they are responsible for paying any state or local property taxes. Additionally, states with inheritance taxes may include the home’s appraised value in their fees.

Those who decide to keep the home and rent it out also have to account for different expenses that come along with being a landlord. Home maintenance fees are a major factor. Older homes often come with plenty of charm — and some quirks as well. Consider any renovations that might be in order. 

Surf’s up

For Gen Xers and Millennials, the Silver Wave may mean inheriting a home, which presents both opportunities and challenges. 

As families prepare for inheritances and wealth transfers, strategic planning and collaboration will be key. By proactively engaging in estate planning, understanding tax implications, and exploring their options, heirs can navigate the complexities of real estate inheritance with confidence.

 

Get financially happy.

Put your money to work for life and play.

1 Fast Company, “We’re in the midst of the ‘great wealth transfer’: How some Gen X, millennials, and Gen Z are getting rich,” January 2024

2 Pew Research Center, “Key facts about housing affordability in the U.S.,” March 2022

3 Federal Finance Housing Agency, “House Price Index Datasets,” Accessed January 2025

4 Business Insider, “What is the Average Mortgage Payment?,” August 2024

5 National Association of Realtors, “Housing affordability index,” January 2025

6 Internal Revenue Service, “Gifts & inheritances,” Accessed January 2025

RO4186787-0125

The Currency editors

Staff contributors

The CurrencyTM, a publication from Empower, covers the latest financial news and views shaping how we live, work, and play. We keep you current on ways to plan, save, and invest for life.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites.

Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.