I inherited a home and want to sell it. What are the crucial things that you need to know before selling an inherited home ?
Inheriting a home can be a gift and a challenge at the same time. First, there is a loss to cope with and the uncertainty and sometimes the expense of now owning and being responsible for another property.
What should you do with the home?
Can you sell or rent out an inherited house?
Can you sell your inherited home fast?
What is your responsibility for the home?
Where do I start?
If this is your situation, watch the video above.
I have sold several inherited homes and work closely with the executors, trustees, attorneys, and anyone else involved. In this video, I discuss the steps to take if you have inherited a home.
So what do you do with an inherited home?
Depending on your circumstances you can do one of 3 things.
- You are able to move into the inherited house
- You could rent out the inherited home.
- Or you can sell the inherited property.
Ownership
Are you the sole owner of the house now, or are other siblings and relatives involved with ownership? If so do all parties agree on what should be done with the home?
This tends to be a stumbling block for several people.
During this time of dealing with a loss, it is important to remember that emotions can and will run high. Siblings and other relatives do not always agree on what needs to be done. If possible it is best to have an educated discussion with all parties and review the pros and cons of the above choices. Is there one person that will take the point on handling all the details and keep the others apprised?
Debts
Do you know if there are there outstanding debts? Is there a mortgage on the home? Are there other debts that need to be settled with the estate such as property taxes or other unknown bills? There is a lot of information to gather before making final decisions.
Capital Gains and other tax implications
Inherited property can take advantage of the Stepped Up Tax Basis. Which states the tax basis is the fair market value of the property at the time of the previous owner’s death. For instance, if a home was purchased at 300,000 and then at the time of death it is appraised at 500,000 the new stepped-up tax basis is 500,000. If you sell the home at 500,000 you will not be paying capital gains.
This is not the same as inheritance taxes. Tax laws are not easy to decipher and I am not an accountant I highly recommend discussing the right steps financially with your professionals when making choices with the home. You will need to report the proceeds to the IRS even if they are not taxable so be sure to consult with your accountant on the best steps to take.
Documentation
The home will need to go through probate if there is no will or trust. Be sure you have all the appropriate documentation. Keep everything together as there are lots of questions and details that come up during this process. Again this is why having one person in charge, (hopefully the most organized person) handles the paperwork.
So when selling what first?
One of the most emotional is going through all the personal belonging left in the home.
Going through a loved one’s items can bring back lots of memories. Be easy on yourself and try to only keep what is a special memento. It is almost impossible to take everything and combine it with what you already have. As hard as it is it will be much better for you in the long run.
Start organizing items into piles, what to give away, what to throw away and what to sell.
Hold a yard sale or an estate sale. There are wonderful companies that will help come in, organize and dispose of what is no longer wanted. Sometimes having an impartial set of eyes helps as well. If I can help by providing companies that help with this let me know
Ask the question
Should I sell it as is or should I have repairs made to the home? What will be the difference in price and profits? Which will be better?
If the home was owned by an elderly loved one there may be deferred maintenance to the home. You may be inheriting a home that has both visible and hidden problems that will come up in inspections. Again there may be times when contracting with a repairman is necessary and that is another way I like to be of help.
If you decide to make needed updates sure to have a timeline for getting the work done. And have someone that will make sure tasks are being done timely.
If you decide to sell the home as is it may be beneficial to have the home inspected first. This way you know exactly what you will be passing on to the new owner and the price can be determined with this knowledge.
Ongoing Expenses
During the time of your ownership of the property, there will be ongoing expenses to keep in mind.
- Property taxes
- HOA fees if applicable
- Utilities
- Lawn care
- Insurance. And this one is hard as many insurance companies do not like to will not insure vacant homes and the cost can be high.
- Security of the home. When a home is vacant security is of vast importance.
A few final notes and tips to keep in mind when selling an inherited home.
- You may experience longer probate periods than anticipated.
- Delays of paperwork and a lot of questions, sometimes that you feel you have already answered.
- Having more than one heir can sometimes lead to conflict. Not everyone sees eye to eye on what to do with the home or the items inside the home.
- The property could hold more loss than gain. And as time moves on and you have to continue with the day-to-day upkeep the home can become an expensive inheritance.
- Not all inheritance is a good inheritance.
Having a wonderful attorney, accountant, and the real estate agent is paramount in getting the home settled quickly and with as much ease as possible most ease and for the most amount of money.
If you have more questions about the crucial things you need to know before selling an inherited home I have sold many inherited homes and would love to discuss them if you have further questions. Contact us
