If you recently inherited a house and do not plan to live in the house or to fix it up and rent it to tenants, then you are probably wondering what the steps are to sell an inherited house.
If you are the executor of an estate, then following the death, the will of the deceased needs to be filed in probate court where a judge will determine the validity of will. Learn as much as possible about the home’s status and take steps to verify your ownership, and the ownership of any other beneficiaries named.
Unless the will is explicitly clear on who owns how much of the property, this can be complicated. If one beneficiary wants to sell and the others want to hold, there is going to be a dispute. For example, if you are a surviving spouse, the process is usually very simple because ownership is simply transferred to your name. However, in most cases, there are many aspects of selling inherited house that should be considered.
Step 1: Taxes
There could be several tax implications for inheriting a house and selling an inherited house. The best thing to do is connect with an advisor who can educate you on any tax implications of the different options regarding selling the inherited home.
Some of the tax issues could include:
- Inheritance tax
- State or local taxes from the estate if the net taxable worth is more than a certain amount
- Capital-gains tax if you decide to sell the inherited home (you are exempt if the home is a personal residence)
- Inherited property is taxed on the value of the property the day the owner died
Step 2: Keep the house safe while vacant
While many people don’t think about this issue, it’s important to remember that vacant houses can deteriorate very quickly. They are more vulnerable to crime and break-ins as well. Keep the air conditioning turned on to prevent the inside of the home from deteriorating, keep the outside lights on, and consider investing in a camera security system and an alarm.
Step 3: Appraise the house
If you are considering selling the house, then you will want to have it appraised. This will help you decide the price and terms. When considering your price, remember that you will need to hire a real estate agent or broker and an appraiser, get a survey, a real estate lawyer and possibly an accountant. Carefully think about your goals. This will help you determine the best course of action.
Step 4: Assess the real estate market where the house is located
What are other houses on the street selling for? A real estate agent can advise you regarding the current market in your area. They can also provide advice regarding what updates, if any, should be made to the home.
If the house is outdated or in disrepair, the best option might be to sell to an investor. While investors buy houses at a discount, they also purchase as-is and do not require repairs. Many, such as Big State Home Buyers, will also clear the title and clean the house at no cost to you and your family. Selling to an investor often makes the most financial sense when selling an inherited house.
Step 5: Insurance and Remaining mortgage
The property will need to be insured since there is a new homeowner. Real estate taxes may go up after the property is assessed for real estate purposes.
Is there a remaining mortgage on the house? In most cases, there is enough equity in the inherited house to sell to an investor and still make a profit. In rare cases, heirs choose not to accept the house and allow it to go into foreclosure if the house is worth less than what is owed.
Step 6: Clearing the title
Clearing title issues can be a time consuming process if there are multiple liens on the house or missing heirs. Click here for our post on how to begin preparing to clear title.
Lastly, if you have any other questions regarding selling an inherited house, call Big State Home Buyers.
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