How to Leave Rental Property to Your Kids in Georgia

Many Georgia rental property owners ask me the same question: “How do I leave my rental properties to my kids without creating a tax burden?”

It’s a smart question. Inheriting rental property can create capital gains tax issues, refinancing challenges, probate delays, and tenant complications. Most property owners want to pass the rental down cleanly, with no headaches and no extra work for their kids.

But here’s the question almost no one considers: Do your kids want to inherit the property in the first place?

This is how second-generation landlord problems are born. Parents assume their kids will inherit, hold, and manage the rentals. But more often than not, the kids choose to sell. When there’s no clear plan for that scenario, families can end up stuck:

• Disagreeing about what to do
• Stalled in probate
• Paying unnecessary taxes
• Leaving tenants in limbo
• Struggling with upkeep or HOA deadlines
  

This article will walk you through how to plan for both scenarios—whether your kids want to keep the property or sell it—and how to talk to them about it now so you aren’t leaving them a mess to manage when you’re gone.

Let’s start with the most common challenges clients face when passing down rental property.

Common challenges with leaving rental property to your kids in Georgia

Rental property is different from a personal home. It introduces a whole host of unique challenges, such as:

• Capital gains tax questions: Heirs often ask: “Will I owe taxes if I inherit rental property?” The good news is that heirs receive a step-up in basis that effectively eliminates capital gains tax, but selling too late or transferring the property incorrectly can create a tax burden. 

• Lifetime gifting: Gifting rental property while you’re alive means your kids inherit your basis, not a step-up. If they sell later, they’ll owe capital gains tax on the full appreciation since you bought it, plus depreciation recapture. This can create a major, unexpected tax burden.

• Georgia probate delays: Even uncontested cases can spend months in court. In that time, tenants are still living on the property, bills are still due, and lease terms keep moving.

If you want to make sure your kids can manage or sell your property without waiting on Georgia probate, let’s talk. Book a discovery call and we’ll walk through your options together.

• Tenant responsibilities: Your heirs will need to manage leases, home repairs, deposits, eviction timelines, HOA rules, maintenance, utility payments, etc.

• Title and deed problems: If the property isn’t titled correctly (for example, if it’s still in your name rather than in a trust), selling the property can take a long time.

• Misaligned expectations: Where you may see the property as a legacy, your kids may see it as a source of stress. 

This is why it’s vital to talk to your kids about inheriting property while you’re creating your estate plan. That way, you can plan around the outcome that makes sense for your family: keeping the property, or letting it go.

How to plan if your kids want to keep the rental property

If your kids do want the property, you can make the transition smooth and minimize the tax burden by planning ahead.

• Put the property into a revocable living trust: In most cases, this is the best way to keep property out of Georgia probate and ensure that your kids don’t have to struggle with frozen assets, an interruption in rental income, or legal delays in managing the property.

• Name a successor trustee who can manage the property immediately: This is essential if rent still needs to come in, leases need renewal, or repairs come up.

• Provide property-specific instructions: Include details about how to handle existing tenants, preferred contractors, ongoing maintenance items, who should manage the property, etc.

• Make sure your kids know the financials: This includes mortgage details and payment schedule, insurance, HOA dues, lease terms, property management agreements, and any other essential contracts or payments due.

How to plan if your kids don’t want the rental property

This scenario is much more common than you might think. I’ll dig into why they may not want to inherit (and how to talk to them about it) in the next section. 

But for now, if your kids want to sell the property quickly, here’s what to do:

• Use a revocable trust to avoid probate delays: Probate creates a situation where property can’t be sold until the court authorizes an executor. This means that tenants can’t be legally directed, bills can pile up, and family members can disagree about timing and next steps. A trust will avoid all of this hassle.

• Give the trustee authority to sell immediately: A good estate plan should explicitly give the successor trustee the power to list the property, select agents, clear out belongings, and distribute proceeds. 

• Plan for cash flow: Selling a rental property can take time. In the meantime, utilities, taxes, insurance, and mortgage payments are still due. Liquidity tools like small life insurance policies or savings accounts can cover these costs, so your kids aren’t left paying out of pocket.

• Consider capital gains timing: Your heirs get a step-up in basis, so quick sales are often the best way to eliminate the tax burden. For this reason, your plan should make it easy for them to sell quickly if needed, not wait months for probate.
• Beware lifetime gifting: Remember that gifting property during your lifetime will incur a capital gains tax, so plan carefully for when and how to gift property to your children.

Why your kids might not want to inherit your rental property

There are lots of reasons why your kids might not want to become second-generation landlords. Here are the most common ones I see in my practice:

• They don’t want the responsibility: Managing repairs, leases, and tenant issues isn’t worth the income for everyone.

• They live out of state: Handling an Atlanta property from all the way across the country isn’t easy.

• They don’t want the liability: Rental property can feel risky, especially without an LLC to protect them from legal exposure.

• They’re too busy: Adult children who own a business or have kids of their own often don’t have the time or energy to manage a rental property too.
• They can’t afford it: Some heirs might prefer to pay off student loans, fund childcare, save for a new family home, or simply invest elsewhere. 

How to talk to your kids about inheriting rental property

Talking to your kids ahead of time about their reasons helps you design the right plan for your whole family. But these conversations don’t have to be heavy. Here are a few simple conversation questions you can ask to get things started:

• “Would you want this property, or would selling be easier?”
• “If you kept it, would you want to manage it yourself or hire someone?”
• “If you didn’t want it, would you prefer I leave plans in place for selling?”
• “What would make things easier for you if you inherited this rental home?”
• “If you were making this decision for your kids one day, what would you do?”

Taking the time to have a simple conversation now prevents years of stress later. Often, kids are relieved just to be asked. Or maybe they’ve never considered their answer, and they’re happy to be involved in the process.

If you need help broaching the topic with your kids, just ask. We’ll build a plan that matches your family’s needs. 

And once you know their answer, we build a plan that matches it.

Georgia-specific considerations for rental property inheritance

If you own rental property in Georgia, here are a few state-specific considerations to take into account:

• Probate delays are real: Even simple estates can take months to process. Trusts avoid this.

• Tenants need lawful direction: Only a legally empowered trustee or executor can manage evictions, lease renewals, repairs, security deposits, and the like.

• Georgia has no estate tax: But federal limits are changing in 2026.

• Property in an LLC still must transfer: LLC membership interests must be handled through your estate plan, not assumed.
• If your kids are minors: You will also need a standby guardian, a permanent guardian designation, and a trustee who can manage the rental property until they’re adults or manage a sale on their behalf.
  

Don’t let your rental property become a burden

You don’t need an over-complicated plan your family doesn’t understand and can’t use. You need one that actually works. If you own rental property in Georgia, let’s create a clear plan that makes things easier on your kids and keeps your property out of probate.

Click here to book a discovery call.