When a parent, grandparent, or longtime family member passes, the assets they leave behind often include more than memories—they may include a commercial real estate property. For families inheriting commercial property, whether it’s a single asset or a series of holdings accumulated over decades, the question is the same: Now what?
For many families, the decision comes down to two paths—continue to manage and grow the real estate, or prepare the portfolio for sale. In either case, early and informed decisions can mean the difference between preserving value and losing it.
Start with the Numbers
Tax considerations should come first, according to estate planners and brokers alike. The step-up in basis is one of the most overlooked tools available to heirs. If a property’s value has appreciated over time, the capital gains reset to the market value on the date of death. In other words, selling shortly after inheriting can drastically reduce, or eliminate, capital gains tax exposure.
However, the tax picture can change depending on how the property is held. Real estate in trusts, LLCs, or partnerships may require additional legal and accounting steps before any sale or transfer can occur. Families are advised to consult a qualified CPA or estate attorney before initiating any transactions.
Commercial Real Estate Brokers Hold the Playbook
One of the most important, and most underutilized, resources in a real estate transition is the broker who previously worked with the family member.
If they had a longtime broker who helped them buy, lease, or manage the property, that person likely holds a deep knowledge of the asset. They know where the bones are buried, literally and financially.
Still, legacy relationships only go so far. If the broker was unresponsive, failed to advise proactively, or didn’t look out for the family’s best interests, it may be time to consider a new professional. A transition in ownership can be an opportunity to reassess not just the assets, but the team managing them.
It’s Business – But It’s Also Personal
Many second and third-generation inheritors face the added pressure of doing right by their loved ones. That can mean different things to different families: maximizing returns, keeping certain properties in the family, or maintaining long standing tenant relationships.
Regardless of the goal, treating the portfolio like a business is essential. That means assembling a team: attorney, CPA, real estate broker, who can bring clarity, structure, and strategy to what is often an emotional handoff.
If your family is facing decisions about inherited commercial property, expert help is available. Our team at W Commercial has worked with multigenerational portfolios across the North Bay and beyond, and can provide discreet, professional guidance.
