When inheriting a home, you may be anxious to turn it into cash. But selling an inherited house can be complex and overwhelming, especially if this is your first time going through it.
Understanding the different steps involved in selling an inherited property to get the best price for it and maximize your return is important.
This article will explore the various steps needed to sell an inherited house for top dollar. We'll look at key considerations such as working with a real estate agent, determining fair market value, and dealing with capital gains and taxes.
Let's look at how exactly to navigate selling an inherited property.
1. Navigate Probate Process to Sell Inherited Property
The first step in selling an inherited house is understanding the probate process. Probate is a court-supervised legal process that validates a will and appoints an executor to identify estate assets, pay creditors and distribute the remaining assets to beneficiaries.
If the deceased person dies without a will, the court will appoint an administrator. Depending on your state's laws, probate may or may not be necessary to sell an inherited house.
[Need help with probate? We offer helpful probate services and will work with you to find the plan that meets your needs. Learn more.]
2. Consider Hiring a Certified Probate Real Estate Agent
The next step in selling an inherited house is finding the right real estate agent. A knowledgeable real estate agent can be a great asset to help you navigate through the process.
If the house is included in the probate process it is important to find a certified probate real estate agent who understands the probate process.
A certified probate real estate agent is trained in the probate process and should be able to help you correctly navigate the process of selling your inherited home.
They can help you set a realistic selling price, market the house and negotiate with potential buyers to get top dollar.
Your probate real estate agent should also be able to connect you with attorneys and accountants who can help you with legal documents and answer questions about capital gains taxes, property taxes, and other issues related to selling an inherited house.
3. Research the Fair Market Value of Your Home
The next step in selling an inherited house is determining its fair market value. The fair market value of a home is the amount for which it could be sold on the open market, assuming both buyer and seller are informed and willing.
It's important to be aware of the fair market value to set a realistic price for it when selling an inherited property.
This can be done by looking at comparable homes in the neighborhood and considering any upgrades or renovations that may need to be made to your inherited property.
Also, Your certified probate real estate agent should be able to provide you with a market analysis of comparable homes in the area so that you can determine an appropriate asking price.
4. Prepare for Taxes When Selling Inherited Property
Taxes can be a major factor when selling inherited property and should not be overlooked.
Depending on the situation, there may be federal estate and inheritance taxes and capital gains taxes.
Property owners will need to pay the property taxes up to the date of sale to complete the sale.
For those selling a primary residence, there may be some protection from capital gains taxes in the form of the Home Sale Tax Exclusion.
Under this program, any profits up to $250,000 ($500,000 for married couples filing jointly) from the sale of a primary residence may not be taxable.
5. Finalize the Sale of Your Inherited Home
The steps in selling an inherited property depend on the state and can vary greatly. In some states, the process begins with going through probate court to have the property transferred into your name.
There may be additional steps in other states, such as filing special paperwork or obtaining a court order.
Once the property has been transferred into your name, you can start selling it. This typically involves hiring a real estate agent to list the home and market it to potential buyers.
The agent will help you determine the home's fair market value and negotiate an offer that's in your best interests.
Once an offer is accepted, the sale must close, and all the necessary paperwork must be completed.
Once all of this has been done, the sale can be completed, and you'll have your money from the sale.
FAQ's
What is the holding period for inherited property?
In general, there is no holding period for inherited property. This means that if you sell inherited property immediately after receiving it, you may be subject to capital gains tax on any increase in value from the date of inheritance.
Is it better to keep or sell an inherited house?
The decision to keep or sell an inherited house depends on various factors, such as your financial situation, personal preferences, and the condition and location of the property.
It is important to consider the costs and benefits of each option and consult with a financial or real estate professional before making a decision.
Is selling inherited property taxable?
If you sell inherited property for a profit, you may be subject to capital gains tax on the difference between the sale price and the property's fair market value at the time of inheritance.
However, if you sell the property for less than its fair market value at the time of inheritance, you may be able to claim a capital loss deduction on your taxes.
It is important to consult with a tax professional for guidance on your specific situation.
What taxes do I need to pay when I inherit property?
Depending on the estate's value and the tax laws in your jurisdiction, you may need to pay federal estate tax or inheritance tax.
Conclusion
Selling inherited house can be a complex process and involves more than just putting the property up for sale.
It's important to familiarize yourself with the laws and regulations in your area, hire a knowledgeable real estate agent and understand any federal estate, inheritance, or capital gains taxes that may be involved.
Doing all this will help ensure you get top dollar for your inherited property and that the sale is completed quickly and smoothly.
Denise Harper Davis
Certified Probate Real Estate Specialist
Licensed Realtor
252-902-9006
* NOTE: North Carolina Probate Solutions and the author of this article is not a licensed attorney or CPA. This post should not be considered legal or tax advice. Always consult an estate attorney or tax professional when needing legal answers and legal advice.