Selling an Inherited Property in Plano

Getting a property through inheritance can be hard both emotionally and financially. Does the place need a lot of costly repairs? How much will taxes cost you? Is there a will in place, or will you need to go through the probate process? However, inherited properties can also present a wonderful chance for real estate investors and buyers who want to snag a home at a lower price and add their personal touch. So, what does it take for someone to sell an inherited property? Are there unique steps that must be followed when selling this kind of home? This article will break down the process of selling an inherited property, aiming to help you make a profit.

How To Sell An Inherited Property in Plano

So, you’ve received a property as an inheritance and are wondering what to do next. In many states, the property you inherited needs to go through probate. This is a legal process where the court decides who the rightful owner is. During probate, the court officially hands over the estate’s assets to the beneficiaries or heirs. Depending on whether there was a will and the specifics of your state, this process can either be quick or take quite a bit of time.

Determine the Executor

When it comes to properties passed down with a will, finding the executor of the estate should be a clear-cut task. A key part of a will is choosing an executor who can fulfill the wishes of the person who has passed away during the probate process. Any property mentioned in the will cannot be sold until the Court confirms it, but as soon as the will is approved, the executor can start acting on what the deceased wanted. However, if someone disputes the will or if there is no will at all, things can take longer because the Court needs to get involved.

The probate court will appoint a neutral person, not related to the family, as the estate’s administrator. These administrators have a role similar to that of an executor; they are in charge of making sure the deceased’s wishes are followed as outlined in the will, settling the estate’s debts, and dividing the remaining assets. They might also decide if any real estate needs to be sold to cover debts like unpaid taxes or mortgages.

Working with Lawyers and Real Estate Agents

Selling a home you inherited can be tricky, so it’s important to have a skilled lawyer to help you through the process. After getting the green light from the probate court to sell the property, the next step is to team up with a real estate agent who knows how to handle inherited homes. An agent with this kind of experience will be aware of all the special rules and details involved in these sales. They can assist you in finding the right buyer who will offer the best price for your inherited property. Additionally, they will advise you on which repairs and improvements are worth your time and money, and which ones are not. Following their guidance could make a big difference in selling your home quickly and at a good price, rather than letting it linger on the market and selling for less than it’s worth.

Resolve Any Debts

When you think of the word “inheritance,” do you picture a distant relative leaving you a grand mansion in the forest, or do you see the reality of managing a property that might have debts, like liens on the title, overdue taxes, and a mortgage that could make it hard to earn a profit when you sell? Unfortunately, when someone you care about passes away, you often have to handle their debts, which could include taxes, mortgages, or credit card bills. Any property you inherit needs to help pay off those debts before you can get any money from the estate. While a home may look like a valuable asset, it can also turn into a costly burden. A knowledgeable estate advisor can help you explore your choices for managing an estate.

Clean & Restore the Home

After you take ownership of the property, the next thing to think about is what you want to do with it. You can choose to live in it, rent it out, or sell it. Often, when someone we care about passes away, they leave behind a house that needs a lot of work. It could be that the house hasn’t been cared for in years and requires thorough cleaning and repairs, or maybe it hasn’t had any updates and needs a complete makeover to be ready for the market. This part of inheriting a property is something many people overlook.

Do all heirs have to agree to sell the property?

No, the Heirs do not need to all agree to sell a house or property that has been inherited if a will or the probate court has already confirmed ownership. However, if there is no established ownership—like in cases where there’s no will or a Court-appointed administrator is involved—then all Heirs must come to an agreement to sell. This rule also applies to properties that the Court has auctioned off to settle estate debts. If a buyer wins a house at auction but one or more Heirs oppose the sale, the purchase will be delayed until the disagreement is resolved and an agreement is made.

How to Settle a Disagreement

When Heirs disagree about an estate, there are different ways to find a solution. First, it’s important to have an executor in place. This person makes sure that the wishes of the deceased, as written in the will, are followed. This can help prevent arguments about what happens to the assets. If there isn’t an executor and there are disputes over the will, you might need to consider hiring a mediator. A neutral third party can help everyone talk through their differences, which is usually much less expensive than going to probate court.

Best Practices

But what if the issue is around the executor themselves? Disputes can occur when a family member is named as the executor or trustee of a will, causing strife with the other family members. If this has happened to you, an option is for the person to decline the appointment and choose an independent fiduciary, such as an estate-planning attorney, to administer the will. Stepping back while a neutral party steps in might not just keep arguments from cropping up, but might also give everyone the time and space to deal with difficult emotions before it permanently damages your family. 

How is inherited property taxed when sold?

State and local governments in the United States collected over $5.3 billion in revenue from estate and inheritance taxes in 2020. That’s a lot of taxes! But with laws and regulations different from state-to-state, you’ll want to do your research and contact a lawyer with knowledge and experience of taxes and estate planning as you deal with a surprise inheritance or you’re writing your own will. 

State Tax Laws

Each state has different laws regarding inheritances. In the case of the sale of an inherited property, states may take an estate tax, an inheritance tax, as well as a capital gains tax on your inheritance. Currently, twelve states have an estate tax, 5 have an inheritance tax, and one has both an estate and inheritance tax.

Capital Gains Tax on Inherited Property

What is the capital gains tax and which states require it? The capital gains tax is paid on the appreciation of any assets that an heir inherits through an estate but it is only levied once the asset is sold for a profit, not when you inherit. This tax is then paid on the difference between the sale price and the purchase price of the property. Most states require this tax paid on an inherited property, but there may be exemptions for individuals selling a property for less than a certain amount. An example is Washington State, where the capital gains tax is not levied on homes and/or properties sold for less than $250,000. There may also be other legal ways to get around or reduce the capital gains tax in your state, including reinvesting the money in another property. Consult with a tax lawyer knowledgeable of the laws in the area you will be selling before proceeding with the sale of your property.

Estate Taxes

An estate tax is a tax paid directly out of the estate to the state before anyone is able to inherit it. Worried that you might get a huge hit taken from the estate? Don’t worry! The estate tax has a minimum threshold which in 2023 was $12.92 million for individuals. This means that the government is not able to charge you an estate tax unless your total taxable estate is worth $12,920,001. The remainder is passed on estate tax-free. Despite having such a high threshold, each year more states repeal their estate tax laws, losing out on millions of dollars of revenue.

Inheritance Taxes

Only six states have an inheritance tax, meaning that it is likely that you are in the lucky majority that won’t have to deal with this. But if you live in one of those six states – Maryland, Nebraska, Kentucky, New Jersey, Pennsylvania, and Iowa – you as a beneficiary/Heir to an estate will be required to pay taxes on your inherited assets and properties. But don’t worry – even if you live in a state that has an inheritance tax, you won’t have to pay a dime if the deceased lived in one of the 44 states that does not have this tax.

Documents required to sell an inherited property

To show legal ownership and place a property for sale, you will need to have a copy of the documents issued by the court that grant you the legal authority to act as the executor or administrator of the estate. These documents will establish your ability to manage the inherited property. Once a buyer is found and you are ready to close, you’ll need the deed, title insurance, or other relevant legal records to establish the legal ownership of the inherited property. 

Do your research regarding what additional documents may be needed to sell an inherited property! Some jurisdictions may require additional property-related documents, including previous surveys, inspections, or any other relevant paperwork that pertains to the property’s condition or history.

Is there an easier way to sell?

Yes, there is! EXCALIBUR HOME BUYERS is a direct house buying company that has built our reputation on buying inherited houses for cash with less stress and less fees. Contact us today and get a competitive cash offer for an inherited house, condo, or property. We buy homes in any condition, and we can also help with the convoluted process of selling a house in probate! Let us make your home selling experience as straightforward and stress-free as possible so you can move on with your life.

Even if the house suffered major damage in the last storm or was neglected for years and needs a large amount of upgrades to make it “market ready”, once you accept our fair cash offer our team of experts will handle all of those expensive repairs so you don’t have to! We make selling an inherited house easy.