What Is Inherited Property and How Is It Inherited?Simply put, inherited real estate or property can be a building or land that is typically received by an heir after the original owner passes away. There are various ways that inherited homes are passed down to other family members or heirs. These include:
- Estate Plan or Will
- Beneficiary Deed
- Intestate Succession
How These Property Transfers WorkThe will or estate plan is drawn up while the owner is alive. If no will or plan exists when the owner passes away and it’s time to inherit property, a beneficiary’s deed may suffice. Without a deed, a probate court will use intestate succession to distribute inheritance based on state laws. In the case of gifting, the inherited estate is passed on while the owner still lives. In most cases, however, an inherited home is bequeathed following the original owner’s death. The heir then assumes all related expenses, such as property taxes, maintenance costs, and home insurance. Heirs may also have to address monthly mortgage payments and manage personal belongings. Although the heir may be a clever real estate investor, outstanding debts, inheritance disputes, and estate taxes can persist long after the deceased person. In some cases, multiple beneficiaries make it difficult to determine the rightful new owner(s).
How Does It Work Legally? What Laws Apply to an Inherited House?Although the laws governing inherited homes vary by jurisdiction and inheritance specifics, they generally fall under the following categories. These laws can make selling an inherited house with a real estate agent confusing and time-consuming.
Inherited Home Property LawsAfter the heir is officially the new owner of an inherited home, he or she must assume a host of responsibilities, such as compliance with all applicable property laws. These property laws include, but are not limited to, building codes, zoning regulations, and environmental regulations.
Probate Process LawsFollowing the owner’s death, an estate will usually go through the probate process. During probate, before anyone can inherit property, an estate administrator or personal representative will validate the will, determine the heirs, and help resolve outstanding payments and taxes. The average inherited home must go through this probate process to legally transfer ownership. A personal representative or executor will ensure all outstanding debts are covered. Depending on the state and jurisdiction of the inherited home, the individual managing probate may be called an executor, personal representative, or estate administrator. In certain situations, a probate attorney may assist as well.
Jointly Owned Inherited PropertiesIn the case of more than one inheritor, joint ownership may arise. When an inherited home is jointly owned, the heirs must work out the distribution of responsibilities and ownership shares. Joint ownership commonly takes two forms: tenancy-in-common (TIC) or joint tenancy with the right of survivorship. In TIC, all owners hold separate shares. In joint tenancy with the right of survivorship, all owners have equal shares and the ownership simply transfers to surviving ow ners upon death.
Inheritance Taxation and Property TaxesSome inherited houses in some jurisdictions may be subject to inheritance tax and federal estate tax. Inheritance tax and estate tax may be a significant part of this real estate ‘transaction.
In certain cases, substantial taxes may be owed based on the fair market value, demanding more money than initially anticipated. Inheritance tax and estate tax also depend largely on the inheritor’s relationship with the owner.
Unlike inheritance tax, the estate tax is often paid by the estate and not the heir(s).
The tax implications can be onerous, as many inheritors simply don’t want to have to pay taxes and fees associated with the inherited home.
Although a tax professional can help, many heirs may prefer to sell an inherited property. All-cash homebuyers can make this process very easy.
Why Sell an Inherited House? Is It Worth It?Depending upon how you sell, when you sell, and how quickly you sell, you may be able to enjoy various benefits of vending the property rather than keeping it. These include deferring capital gains taxes, streamlining the home sale process (fewer worries), and making a good profit in the process. It all depends on your goals, needs, and circumstances. Do you want to put the home on the open market and wait for that perfect buyer to come along? Are you tired of owning the property and paying utility bills and taxes? Just want to sell the property to invest in other assets?
Top Reasons For Selling an Inherited HomeIf you want to sell an inherited house fast for cash, a cash buyer can help. Inherited property owners typically sell for the following reasons:
- Financial duress
- Family relationships
- Personal goals/reasons
- Lack of access
Selling Inherited Property Doesn’t Need to Be a Headache
Whether you want to sell an inherited house to offload the burden, or are in a tight financial bind, our buyers can facilitate. With team members all across the country, we offer creative purchase solutions for all kinds of clients, whether they own an inh erited house, struggle with finances, need to move, face life-changing issues, and more. To sell an inherited property in 2023, all you need is trusted homebuyers on your side. Unlike a standard rea
l estate agent, a cash buyer can expedite the legal process from beginning to end.When you sell property with Launch Homebuyers, you don’t have to worry about closing costs, agent fees, repairs, or commissions. Give us a call to see how we can help you sell your inherited home when you need it the most.
7 Main Steps for Selling an Inherited PropertyBecause selling an inherited house can be a complex and layered process, inheritors should take various important steps to ensure they sell the inherited house properly, profitably, and efficiently. Whether it’s a massive, multi-million-dollar primary residence, or a more modest piece of real estate, it’s necessary to approach the process correctly. Here’s how it typically works, should you choose to sell on the market.
- Use Legal Counsel – Attorneys specializing in estate planning and estate sale can help you comply with all applicable laws, rules, and regulations. With legal counsel on your side, you can also address taxes, debts, and other financial and legal issues.
- Know Your Stake – In the case of multiple inheritors, it can be difficult to determine who has ownership and how to quantify or qualify that ownership. With the help of an executor and probate lawyer, you can effectively understand the ownership distribution.
- Determine the Value – Properties range in value, so it’s important to reference regional and local market data, get the property appraised, and consult real estate professionals who understand market values. You want to get what your property is worth, so make sure you speak with qualified specialists.
- Get Market-Ready – Putting an inherited property on the market requires that you have the home in tip-top shape and condition. You want it to look great in photos, videos, and open houses, as this will maximize leads and convert buyers. Make sure any repairs, maintenance tasks, and upgrades are completed before listing the property.
- Find an Agent – If you choose to sell on the market, you’ll need a real estate agent. Just make sure you hire someone with experience and expertise. Also, be wary of certain fees and costs that can add up when using traditional realtors.
- Price and List – A professional can help you price the inherited home properly and competitively at or above fair market value. Moreover, a professional can help you list it on all the leading websites, ensuring the house is presented in the best light possible.
- Negotiate and Close – Your representative will help negotiate all the important details so that you can have all the paperwork finalized, and the contract signed when it’s time to close. Once the deal is sealed and the property sold, you can officially transfer your ownership.
Why Use a Cash Buyer Over a Typical Real Estate Agent?All situations differ, so make sure you know what you want and where you stand. That said, if you’d prefer to avoid the hassles, costs, and complexities of selling an inherited home the traditional way, you can certainly do so. There are multiple reasons why selling to a cash buyer may be the right fit for you.
The Process Is FastWith normal agents, you may have to wait and wait, and frankly, it can be tiresome. With cash buyers, the process is streamlined. They’ll typically assess your property, reviewing size, lot, materials, and year to determine a property value. Then they’ll calculate the cost of needed renovations and repairs. Finally, they’ll figure out what they plan to do once they purchase the property. They may either flip it or rent it out, and this will factor into their cash offer amount.
The Steps Are SimpleFirstly, prospective sellers fill out an online form with important property details. Then, once the form is received, a specialist can be in contact within an hour. This 5–10-minute phone consultation may include a free home valuation. After that, cash buyers will typically request photos and maybe a video. Once they have viewed this, they can provide a formal offer within 24 hours. Some cash buyers can close in as little as five days, but they can also close in weeks or months, depending on the seller’s schedule and needs. Once the seller shows up to sign the documents on closing day, the cash is transferred.
Properties Can Be in ANY Condition
- Pest Damage
- Fire Damage
- Flood Damage
- Foundation Damage
Owners Can Sell for ANY Reason
- Tax Liens
- Code Violations
- Health Problems
- Job or Career Loss
- Back Payments
- Tenant Issues and more!
What About Capital Gains Tax When Selling an Inherited Home?
Nobody likes paying capital gains, so sellers of inherited houses should consider the unique circumstances when they go to make a sale. For instance, when someone inherits a house, the property value is adjusted to match the fair market value at the time the prior owner died. In other words, if the new owner sells the home at or below market value, he or she may not have to pay capital gains taxes. That said, selling the home above its adjusted or “stepped-up” value may incur capital gains tax on any difference between the adjusted value and the sale price. As always, the ability to avoid capital gains tax hinges on various factors, such as the house price, the adjusted basis, as well as deductions and credits.