Inheritance

I am trying to help out my father decide what to do with his mother's home upon inheriting the property. He is worried about the capital gain taxes he may have to pay unless he sells it within 6months of receiving the property (Which from what I understand can help to avoid paying capital gains?). Right now the real estate market is obviously not so great...comparable homes sold in the 500K range last year are now listed 100K less...I'm not sure it would be such a great idea to sell at this time. Plus the house needs some work and updating as it was built in 1948. It is quite large 3 bed 2 bath 1800 sq.feet and I believe the lot is 8,000 sq.feet. My parents do have some debt that they are trying to pay off and still owe about 240K on their current home. My father is retired a and my my mother plans to retire in about 5years. My question is, should they hold onto the property and do the upgrades necessary to sell it in the future? There is a renter there currently I should add. Could they pull out money from the equity and give that as a "gift" to myself or my brother in the meantime? There are so many things to think about and I want to make sure that they are able to plan this out to make the most sense. Any advice or suggestions would e very helpful :)

I am trying to help out my father...He is worried about the capital gain taxes he may have to pay unless he sells it within 6months of receiving the property
Real estate that is inherited receives a FULL step-up in basis...this means there are NO capitals gains for your father to pay. He owns it now, completely tax free and when he sells it in the future, his cost basis is determined by the Full Market Value (FMV) on the day his beloved mother passed away.

Could they pull out money from the equity and give that as a "gift" to myself or my brother in the meantime?
Why in the world would he ever want to do that? Take a loan to pay you cash? This would be a foolish financial move on his part. It would of course be good for you though.

I would highly recommend that your father hold onto the property. The market will definitely go up eventually and down the road when you are ready to sell, you may even be able to get millions for that property. It may not seem so now, however your family can be helped out a lot by using the income from the current renter to pay down bills you have. You can also make upgrades and still see if it possible to raise the rent within legal limits after that. I am not sure what state or province you are in. The short answer to your situation from my perspective is that your father should definitely hold onto the property. Real estate is an excellent investment to have that usually goes up in value, rather than down.

Good point by Fin,if anything use it as a cash flow(rental)if its free and clear use the money on repairs to raise the value to sell in future or use the money on current debt.Eigther way your sitting on a fixed second income period.