Inheriting a house from a loved one is either a blessing or an inconvenience, depending on your circumstances. You are essentially faced with three options: move into the home, rent it as an income property, or sell it. The first two options often aren’t feasible if other beneficiaries are involved. If you are planning on selling an inherited house, there are some things you should understand to avoid obstacles and pitfalls.
Who holds the claim to the property?
The first thing you will need to do is identify who the heir of the property is. This can be tricky if the deceased person didn’t have a will, and their deed doesn’t include joint tenancy with survivorship language. The truth is, you won’t be able to sell the home until there is a clear heir named.
It can get especially difficult if it’s a parent who has passed, and there are multiple living children. Some children may agree that selling is the best option, but others may disagree. It’s best to hire an attorney to help resolve title and heirship issues. In many cases, heirs turn to companies that buy houses for cash once heirship is settled. The sale can be finalized in as little as five days, getting everyone their share of the profits as soon as possible. Some of these cash buyers will also work directly with the real estate attorney and the title company, saving you money.
Purchase a vacant home insurance policy
As soon as heirship is settled, the heir(s) will assume responsibility for maintenance of the property. The maintenance should include purchasing a vacant home insurance policy. This will protect the estate from liabilities such as accidents or natural disasters. While selling an inherited house can be stressful, it’s crucial to ensure minimum levels of care are in place to protect the home while in a vacant state.
Have the home appraised
Though the open market may be the right answer for some, the quickest solution for selling an inherited house is to contact an investor. Here are some reasons to consider an investor or companies that buy houses over a private buyer:
- You can sell the home “as is”
- Convenience
- Faster sale (5-10 days compared to an average of 90 days)
- Cash payment
Taxes
The most important thing to keep in mind is that home sale tax exclusions don’t apply to inherited homes. In normal circumstances, when you own a home for two out of the previous five years, you will benefit from this tax exclusion. You can bypass this if you decide to live in the home for two years before selling, however, most people choose to sell an inherited house right away.
At the same time, the good news is that when you inherit a home, you will benefit from what’s known as a stepped-up tax basis. Usually when you sell a home, taxes are determined by the home’s purchase price plus any improvements that were made to the house. Alternatively, when a home is inherited, the taxes are based on the home’s fair market value at the time of the owner’s death. So, for example, if the house has appreciated a great deal, this tax situation will prevent those who inherited the home from owing large amounts of taxes.
Selling an inherited house in Florida
If you are selling an inherited house in Southwest Florida, Tropic Coast Homes can provide you with a no-obligation purchase offer. Call (239)256-6664 or Contact Us today.
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