I inherited a duplex in Tucson eighteen months ago and I still have not decided what to do with it

The inertia question is the real one and I sat with the same thing for almost two years on a duplex in Albuquerque before I finally made a move, except I made the wrong move. Kept it, spent the $8k on updates thinking I'd bump rents, then had a six-month vacancy when both units turned over at the same time and the numbers went sideways fast. Carrying costs on a paid-off property feel invisible until suddenly they aren't, and I lost about $14k in that stretch when you add the work, the gap, and a property manager I hired in a panic from out of state.

The thing nobody said to me clearly enough is that "paid off" is doing a lot of emotional work that isn't the same as "performing." $1,140 on a $310k asset is a 4.4% gross yield and you're not even in the building to notice the deferred stuff piling up. That's not passive, that's just quiet. The water heater you're worried about is probably $1,200 but the roof you haven't looked at since the estate closed is a different conversation.

The stepped-up basis window is real and your accountant is right to flag it. I did not have that advantage and I still wish I'd sold. You're essentially holding a bond that occasionally needs a plumber.

The math on a paid-off Tucson duplex at $1,140 combined is actually worse than it looks once you account for vacancy, a property manager at 8-10%, and the occasional capital call from 800 miles away. I had a free-and-clear SFR in Albuquerque for three years that I kept telling myself was passive. It was not. The mental load of a property you cannot drive to in twenty minutes is its own tax, and at $310k you are sitting on capital that could do more structured work than a below-market duplex in a market you have no feel for.

What I would have done at the eighteen-month mark is skip the kitchen and raise the rent to market at the March renewal, not to squeeze the tenants but to find out if you actually want to be a landlord or just have been one by default. If $1,380 comes in and it still feels like noise in your life, that is your answer. The stepped-up basis window is not closing tomorrow but it is also not getting more favorable. I sold a similar inherited property in 2021 at a number I felt fine about and rolled it into a DST, which is boring, requires nothing from me, and I have not once thought about a water heater in three years. Eighteen months of inertia is data. It is telling you something.