When you inherit a house, you essentially have three options: sell it, move into it, or rent it out. If you choose to sell, here are some things that go into putting your newly inherited asset on the market.
In the case of multiple people being willed, such as parents choosing to equally will each child a portion of their property, the new owners will be left with the choice of how to split the home and any of its gains. If you’re in this position, here are some things that go into putting your newly inherited asset on the market.
The Selling Process:
Before you can sell the inherited property, you’ll have to go through probate. This is when the court proves the validity of the will. During this step, you’ll need the permission of your siblings and the court in order to continue towards the selling process.
Agreeing to Sell
If everyone involved agrees, the executor can petition the court to allow the sale. If one of the new owners doesn’t want to sell, there will have to be a negotiation. Typically, the disagreeing owner can buy out the other owners’ interest in the property. Sometimes selling is the only option to settle debts in the estate, so the home will be sold anyways per court overruling.
Preparing to Sell
Now that you have permission to sell the property, you have to prepare it for the market. Clean out the belongings, hire an inspector, and complete any recommended repairs before putting it on the market. You could always sell “as is,” but you won’t get as much money as you would if you took the time to make some improvements.
When you sell the inherited property, your tax basis will be equal to the home’s value on the day the person who willed it to you died. The difference between the value and the amount you realize from the sale is your gain -- this will be split between the parties, and each party will put that amount on their taxes. If the house sells at an equal or lesser rate, no gain is reported.
Selling an inherited house can be tough due to emotional attachments to the home. The truth is if you don’t plan to move into the home or you’re too far away to manage it as a rental, selling it is the most logical option.