Inheriting a property can be an unexpected blessing or a major inconvenience.
Either way, it’s typically an emotional process that can be difficult to understand if you’re not prepared. Here is a helpful guide to show you how to sell an inherited property if you suddenly find yourself in the will of a friend or relative.
Navigate the Probate Process
The first hurdle you have to overcome is getting through the probate process. Probate is the judicial process that establishes the legal validity of a will and reviews the assets owned and administered by the deceased in the will. So if you are set to inherit a property, it will be established during this process. If the deceased does not have a will, this process refers to the administering of the estate of the deceased.
The executor or executrix of the will proves that the will is a valid, legal document created by the deceased and begins the process of dividing up the person’s assets to their appropriate beneficiaries.
If you are the sole beneficiary of the property, it makes the process much simpler. But it’s not uncommon for loved ones to leave homes and assets to multiple people. It won’t be too much of a hassle if everyone named is in agreement to sell. But it does require all parties to decide on a course of action and fill out the necessary paperwork, which can often create challenges if not everyone is on the same page.
Pay the Appropriate Taxes
Before you begin the marketing process, it’s important to understand what taxes you’ll be required to pay on the property, if any. In most cases, the assets won’t be subject to federal income tax, unless the value of the estate exceeds $11.7 million. But you may trigger a capital gains tax if the property is sold for more than its market value. Inherited properties can use the step-up tax basis to determine whether the sale will trigger a capital gains tax.
This means that the IRS will base any gains against the current market value of the property, not the purchase price. So if the deceased person bought the property 25 years ago for $150,000, and its current market value is $250,000, the tax would not be triggered unless the sale price exceeds $250,000. So unless you get a great offer on a property that far exceeds the market value, you won’t have to pay too much in taxes.
Market the Property
Once you’ve established ownership of the property, it’s time to market it. There are several ways you can get it off your hands. You could hire a real estate agent to market it to prospective homebuyers and maybe even put some money into renovating it to get the highest value possible. Or if you want to get it done as quickly as possible, you can always sell it to an investor or a home-buying company offering cash. You may not get as high an offer that way, but it will save you time and headaches and prevent you from triggering that capital gains tax.
Before it’s time to sell, you must clear out the deceased’s belongings and divide them among the interested parties. If there is a lot of stuff to get rid of, you may decide to host an estate sale to take care of anything unwanted. Once the home has been cleaned out, it’s time to market the property to prospective buyers.
Close the Sale
Once you’ve found a buyer who is willing to offer a fair price, all that’s left to do is sign the paperwork and close the sale. This is where things may get complicated if there are multiple beneficiaries of the property. But if everyone is on board and happy with the offer, it shouldn’t be too difficult.
Keep in mind that if the home has an outstanding mortgage or other liens against the title, these will have to be paid off at the sale. If the deceased owes more than the home is worth, then beneficiaries have the right to refuse the property.
The executor has the responsibility to administer the transaction and ensure that all the parties named in the will get what they are entitled to. But overall, the process isn’t much different than any normal home sale.
If you recently inherited a property in Colorado Springs and aren’t sure what to do with it, Purple Mountain Holdings will offer you a fair cash offer for your home. Contact us today to receive a no-obligation quote.
