My family has inherited a piece of property in California. What are the tax issues with remodeling or liquidating this property

The title of your post is "Cal Inheritance Tax," so I'll assume that your question is specifically about inheritance taxes on property in CA. The good news is that CA does not have an inheritance tax, so you have no worries on that score. As for "liquidating" the property - when you sell if the amount you receive for the sale is greater than your cost basis, you have a capital gain to report on your income taxes. If less, unfortunately you can't take the loss as this is considered personal property (I am assuming the property is not business related). The cost basis is probably equal to the fair market value of the property as of the date of death of the decedant - the executor of the estate should be able to tell you what that was. As for remodeling - I suppose the only concern is getting the proper permits, and you may see your property tax go up (depending on how the town considers remodeling for property tax purposes).