Selling An Inherited Property
How to Inheriting a house can be exciting, especially if it’s a nicer property than the one you already own. However, if you prefer you can’t afford the mortgage or upkeep of the inherited property, then selling the house would make more financial sense. It may be difficult to sell the property because of emotional connections to the house. To avoid stress-inducing obstacles, wasted time, or unnecessary costs, this guide will give you the straightforward basics of selling an inherited property.
Confirm Who Has Claims to Selling the Property
This is especially pertinent if you have siblings or your parents didn’t leave a will of inheritance. Further complications include multiple heirs, multiple marriages or numerous generations of people who died without wills. Property can’t be sold until issues of heirship are solved. Speak to Title Experts or a real estate attorney about your situation. It’s best not to try to resolve heirship or Title issues by yourself. If property ownership is split between you and your sibling(s), try to reach an agreement about selling the property with them. If direly needed, seek legal action to acquire possession of the house. Once you have confirmed that the property is in your possession due to inheritance, you can continue normally.
If Possible, Live in/on the Property First
Living in a house that becomes your primary residence affords special advantages down the road. Mainly, you can qualify for the capital gains exclusion. With this exclusion, you can keep all the profit of the sale (maxing $250,000 if you’re single, $500,000 if you’re married and file jointly) and not pay the capital gain tax. However, to qualify for this exemption, you must live in the house for two of the five years before the sale. When doing so is convenient, living in the house for two years will allow you to maximize profits from selling your inherited property. Long-term capital gains can be up to 20%, depending on what tax bracket you’re in. If you don’t want to live in the home first, though, you must make other preparations.
Figure Out Taxes
In addition to the capital gain tax, there are other taxes homeowners of inherited property could have to pay. This includes:
- State or local taxes from the property if the taxable worth is more than a certain amount
- Inheritance tax
- A tax evaluated on the property the day the owner died.
Make Sure to Have Vacant Home Insurance
Family members assume the heir will take care of the property’s inheritance once they pass. Such maintenance would include lawn care, electrical and plumbing upkeep, and so forth. If you don’t live on the property, be sure to acquire a vacant home insurance policy to protect it from liabilities, fire, vandalism, or other damages. Most homeowner insurances don’t cover these protections in uninhabited properties, so taking out the specialty insurance is vital.
Maintain and Monitor the House
Even empty houses are prone to deterioration. They’re susceptible to break-ins and squatters, deterioration from lack of use, and pest infestations. To keep up the house as much as possible when you’re not there, keep the thermostat on, do regular inspections on the conditions of the house, keep some lights on, and consider investing in security cameras or alarms.
Figure Out What to Do with Possessions
Inherited homes will most likely contain the previous owner’s possession (unless they morbidly took care of their stuff before they died.) Now you, the inheritor, must choose to keep, throw away, donate, or sell these possessions, as buyers rarely want a fully furnished house full of another person’s stuff. Consider having a yard or estate sale to immediately purge yourself of profitable items – and possibly make a few bucks. Online resources, such as Amazon, Craigslist, and eBay, make it easy to sell used items to interested buyers. If nothing else, the local Goodwill will be happy to take the items off your hands. Going through a deceased loved one’s items may be difficult. Should you not decide to rid yourself of their possessions, consider renting out storage space to fill with the memorabilia. Do whatever must be done to get the possessions out of the property.
Hang on While the Estate Goes Through Probate
Probates involve the legal process settling a person’s final debts. During probates, the property’s legal title is passed from the deceased to their heirs and beneficiaries. Most states have special circumstances and processes for their probate process. Contact a local real estate agent to figure out what the process in your area involves.
Appraise the Property
If you haven’t lived in or been by the property you’re seeking to sell for a while, it’s best to have the house appraised. This will give you the ballpark to set the correct price and terms. Again, hiring the best real estate agent will make the appraising process easier. They’ll help you get a survey and let you carefully think about your selling goals.
Know How to Sell Smart
If this is your first time selling a home, consider this sage advice:
- Don’t accept the first offer. This should be obvious, but it’s tempting if you’re eager to get the property off your hands. Exceptions to this advice, though, is when you’re selling in a hot seller’s market (more demand for houses than available houses) and a buyer is desperate to buy quickly. If that’s the case, consider yourself lucky. The general rule is that interested buyers will make an offer less than what they’re actually willing to pay. Be prepared to be steadfast and when navigating offers.
- Don’t set the price too high. Unrealistic prices turn potential buyers away. Set prices with enough wiggle room to negotiate.
- Don’t make concessions too easily. A potential buyer may not only ask for a lower price but seller assistance with closing costs or a variety of other things as well. While it’s nice to negotiate terms to sweeten the deal with buyers, don’t be a pushover.
Clear Loose Ends
Make sure there are no surprise liens or missing heirs to account for. Once all the loose ends are dealt with after sale, the inherited property can finally be off your mind. Selling an inherited property doesn’t have to be a headache.