What To Expect During the Process of Selling an Inherited House
By Space Coast Daily // February 14, 2020
Have you or one of your clients recently lost a loved one who left them their house in their inheritance? Losing a loved one is never enjoyable, and can be one of the most frustrating and stressful times in a person’s life.
There are always the inevitable arrangements that must be made, and in some cases, this includes dealing with and selling an inherited home. Sometimes this can be an issue that causes much tension within a family, due to them not knowing how to go through the process.
There are a number of simple steps that can be followed to save time and energy when going through the process. Before these steps are taken there are a number of variables that must also be considered, such as associated taxes, costs, inspections, and how you want to sell.
Taxes and Costs
When you inherit a home, you are not always subject to an inheritance tax. However, an inherited home can sometimes require substantial repair costs, which should be considered before selling.
This can include issues with insulation, water damage or mold, remodeling (if the interior is old or damaged), installing energy-efficient appliances, or possibly upgrading for a more modern look. Some people who are able to accomplish these repairs and upgrades on their own could potentially save a lot of money through a DIY project.
When selling a home, you must sometimes pay a capital gains cost of 50% of whatever profit you make when selling an inherited home. For example, if a home was purchased for $100,000 and is now worth $400,000, the capital gain is $300,000 and you would owe taxes on $150,000.
There are also other associated fees you may have to pay when selling your inherited home, such as lawyer fees, realtor fees, inspection fees, probate fees, and others. All these expenditures should be recorded in order to help facilitate potential tax write-offs, or to help equally divide costs among siblings.
Options, Options, Options
Sometimes it can seem overwhelming when considering your options for selling a home that you have recently inherited. You have the option to list the home by yourself (for sale by owner), which many people choose to do when selling a home. In the case of selling an inherited home, there may be other concerns that the family may have to take care of.
For this reason, many people opt for other options. There are a number of realtors available in any given area who can help homeowners sell their homes in a quick and efficient manner.
There are resources to help expedite the sale of your home, often in a localized area, https://socalhomebuyers.com/ along with other numerous services can aid in the process. There is never any harm in evaluating additional options, so be sure to explore the entire breadth of options you have available to decide which is the best fit for your situation.
Do you have siblings? If so, chances are that both (or all) of you will be inheriting an equal amount of the homeownership. This can sometimes spawn issues if for example one of the siblings wants to sell the house and the other doesn’t. If this occurs, there is the option for one sibling to buy out the other.
Buying out means that the one sibling will pay the other for their portion of the inherited home. If the home was sold or rented out, the profits would be equally distributed among the siblings.
It can often be a contentious issue when selling family homes, due to feelings of attachment and nostalgia for people and times which have now passed. For this reason, it is advisable to involve all pertinent family members in all proceedings, costs, inspections, and other associated documentation, unless there has been a prior arrangement for one family member to handle the affairs.
Depending on the location and state of the home you inherited the property may have appreciated a lot of value over the years. For example, if the inherited property was initially bought in 2000 for just under $300,000 it would now be worth close to $1,000,000.
Not all locations have been subject to such extreme price inflations, but if you are close to (or within) any major metropolitan area, it is likely that a similar growth in the housing market occurred. In cases like this, it is possible that you may have to pay a large sum of money in capital gains taxes.
Although money is not a pleasant thing to discuss with family at times, it is essential that families deal with the selling of their inherited property in a way that doesn’t add to the stress of losing a loved one. Hopefully, this article can help shed light on what should be an easy and non-stressful part of life.
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