Inheriting property can be a bittersweet experience, especially when it comes to selling it. Selling an inherited property involves several legal and financial steps that vary depending on the state. The last thing you want is to sell it for less than it is worth in the current market conditions.
You don’t need to worry about selling your property inheritance; We Are Florida House Buyers; we buy houses for cash, quickly with the least hassle, and we buy it as is – no repairs required. Did you just inherit a piece of property and want to sell it? Here’s everything you need to know.
What Is Probate?
It’s the legal process of administering a deceased person’s estate. It ensures the dead person’s property (called the “estate”) gets distributed according to the terms of their will and other legal documents if there are any.
The executor is the person who oversees probate. The executor can be an individual or an organization (bank). They’re responsible for gathering all documents related to the deceased person’s estate and distributing those assets according to their wishes.
A Probate can take 9-12 months because there are many steps to ensure everything gets done correctly and that no one tries to cheat the system.
Must You Apply for Probate?
You don’t have to apply for probate if you have a joint tenancy with a spouse; the survivor automatically inherits all of the property. If you don’t own the property jointly, it will go through probate. If the property has a mortgage, talk to the lender about how they want it handled.
What Happens If a Probate Gets Contested?
If probate is contested, it results in a legal process known as probate litigation. It’s a court proceeding where they challenge the will’s validity or other probate documents. The outcome of a contested probate case depends on the facts and the state’s laws.
During a will contention, a solicitor of one side enters a caveat; they notify the probate registry that they believe there may be a dispute or challenge to the will. It places a temporary hold on the probate process, preventing the grant of probate from issuance until they resolve the caveat.
The person who entered a caveat must provide evidence to support their challenge to the will. This evidence may include medical records, witness statements, or other documents showing that the deceased person could not make the will or that the will resulted from undue influence or fraud.
If they don’t resolve the dispute through negotiation, the matter may proceed to a court hearing, where a judge will decide on the will’s validity. If the judge determines that the will is invalid, they will distribute the estate according to the intestacy laws as if there were no will.
If the dispute gets resolved in favor of the will’s validity, the caveat gets removed, and the probate process can proceed. The executor named in the will can then distribute the estate assets to the beneficiaries according to the terms of the will.
Do You Pay Taxes on an Inherited Property?
The sale of the inherited property is subject to capital gains tax, a tax on the difference between the property’s sale price and the property’s value when the original owner died.
For example, if you get a house inheritance from your parents and it’s $500 000 when they pass, and you sell it at $650 000, you subtract $500,000(step-up basis) from $650,000( sales price). The taxable gain is $150,000; you will pay taxes on the taxable gain.
Suppose the beneficiary uses the inherited property as their primary residence for 2+ years. They may be eligible for the primary residence exclusion, which allows them to exclude $250,000 (or $500,000 for couples) of capital gains from the property sale.
Consult with a tax professional or home buyer familiar with the specific circumstances of the sale and the tax laws of the state where the property location is to determine the tax implications of selling an inherited property.
Can You Sell an Inherited Property?
Once the probate process is complete, and you have the title to the property as the beneficiary, you have the legal authority to sell the property.
However, selling an inherited property may have specific legal and tax implications. For example, you may be subject to capital gains tax on the property sale if it has undergone appreciation since the original owner acquired it. Other costs may be associated with the sale of the property, such as real estate agent commissions, closing costs, and repairs.
Approach the sale of an inherited property with sensitivity and compassion, especially if the property holds sentimental value for you or your family. By taking the time to consider your options and work with trusted home buyers, you can ensure a smooth and successful transaction that meets your needs and preserves the legacy of your loved one.
What Is Probate of a Will and Why Is It Important?