Inheriting a house that is paid off can be more of a hassle than most think.
Inheriting a house that your grandma, parents (Mom or Dad) or from any other relative or friend can put you into an interesting situation sometimes. You might want to keep it but then wonder if you have to pay tax when you inherited a house or any real estate.
You might want to sell that inherited house quickly or look into a way to receive some fast cash on your newly inherited piece of property. And the list goes on with all types of inheritance questions people have when a house suddenly drops into your lap and you might not know what best to do!
Inheriting a House
In today’s article we’re going to provide you a checklist to follow and answer some of the most challenging questions people have when they have inherited a house. You might have already thought about these things regarding the home you inherited.
7 Step Home Inheritance Checklist
- ____ Confirm to see if the property is held in a trust. There are complex legal documents that govern the management and liquidation of property held in a trust. It will be important to know this first.
- ____ Check to see if the homeowners insurance policy is updated.
- ____ Sell the stuff inside the house asap. If a list of beneficiaries are not specifically identified for the items you can consider a round-robin process. Invite all direct family (no in-laws is best) such as sisters & brothers, and go around asking one person at a time what they want and give it to them as you go around to each person. What is left over when done give away to charity.
- ____ Order a home inspection to determine if there is anything wrong with the house and to become aware of any safety issues.
- ____ Determine whether it would be most beneficial to sell the property “as is condition” or to invest time and funds into renovations. Most standard buyers don’t want to renovate. However reputable cash house buying companies like GaryBuysHouses will buy your house in any condition.
- ____ Speak with anyone who is joint owner of the home with you to determine what to do with the inherited property. All joint owners will need to be in agreement before proceeding. If renting or selling all parties will need to be treated and compensated fairly. Your attorney or arbitration might be necessary or helpful in this situation.
- ____ Gather at least 3 bids from realtors, if going that route, to establish the best marketing plan and listing price for the home. Don’t just go with the first offer you get.
Top 15 Questions and Answers About Inheriting a House
How to sell an inherited home?
Answer: Selling an inherited house can be done in many ways. Renting the house and splitting the rent profits where needed with those on title is one option. Another option is to sell it completely and split the any profits. Another is to consider moving into the home. Our sell now move later program could be of assistance to you in this situation as well.
What happens if you inherit a house with a mortgage?
Answer: Work with those on joint title with you to determine a plan that will benefit all and be fair. The executor of the will, the attorney or arbitration might be necessary.
It is about the same process if the house is paid off or there is a mortgage on the inherited house. Here is more information on inherited homes with a mortgage.
How to report the sale of inherited property on my tax return?
Answer: Since the tax laws per state are all different it’s best to consult your local tax professional first on this. In general though you won’t have to pay capital gains tax on increased home values during the owner;s lifetime. You would however pay on the home value increase between the time of inheriting the home to the time you sell the home completely.
What should I do with an inherited house if one sibling wants to sell and the others do not?
Answer: If you have a sibling that is not on title with you they can’t do much. However, if your sibling(s) is/are on title with you as joint owner you will all need to be in agreement before moving forward. The alternative is to go through the courts to determine the particulars of your situation.
I’ve inherited a house from my parents, how long do I have to sell?
Answer: The duration to sell your inherited home or property is up to you and those on title or governing bodies in a trust.
How do you get money from the sell of a house that you inherited if the deceased was in debt?
Answer: In general the debts of the deceased are written off and canceled. To get money from the sell of a house that you inherited is a different issue and not classified as debt per se but as a liability. The inherited home is tangible property that can be liquidated to pay off an existing loan. The property in other words is collateral for the loan that the lien holder(s) the (bank) has on the property. If there is any equity in the sell of the home after paying off the lien holders that sum could be your profit.
What items are deductible when you sell an inherited house?
Answer: Deducting items from your gross income to reduce your tax liability is very situational. It is best to speak to your tax specialist for your state. Generally deductible items could include gas expenses to and from, certain improvement costs if the property or a part of it is used for legitimate business purposes, etc.
How to sell my half of inherited house to sibling?
Answer: It is going to be important for you to speak with the other owner on the title of the property you inherited to establish an agreement on what to do from here. The owner owner could agree to buying you out. In that case the full deed of the home is placed in your other siblings name after he/she is paid the sums needed.
Do I have to pay federal capital gains tax on a house or real estate that I inherited when I sell it?
Answer: Only on the increased value from the time you inherited the home to the time you sell it but tax laws can change. If you inherited a house, you should contact a tax professional.
How can I sell my inherited home without a realtor?
Answer: Contact Gary and he can speak with you about your unique situation and offer you an all cash offer in 10 minutes or less. That’s the best way to sell your inherited property without a realtor. You can skip the middle men and go direct to the cash source so you can get the best deal.