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Do you have to sell your inherited house?

If you've inherited a house and you're thinking, "How do I sell my house quickly? "We can really help you. If you've inherited a house that you can't use, we know it can be frustrating. The house is a huge financial burden, and the only way out of that responsibility is to sell the house. Holding the house means having to deal with the varying costs of repairs, maintenance, inspections, inheritance taxes, mortgages, and more – which can add up to thousands of dollars.

The good news is that you don't have to wait too long – working with us, you can sell your house for cash in just a few days.

Here are four possible scenarios in which you are able to turn your inherited house into cash:
  • During the probate process, either by the executor or the administrator. They will allocate the proceeds of the sale to the recipients and heirs at the end of the probate. The executor may be the nearest relative of the deceased or of some other person mentioned in the will, such as a paid professional lawyer.
  • After the title has been passed to you via a probate or other process, and you become the rightful legal owner.
  • If the property is held in trust by the trustee, without proof. The trustee will sell the house while it is still in trust and pass the proceeds to you.
Is there a mortgage on the property?

If there is a mortgage on the home you have inherited, the terms of the mortgage can influence how quickly you decide to sell or rent the house.

  • Duty-on-sale provision: see if the mortgage has a duty-on-sale clause specifying that the entire loan is due and payable if the seller sells the property to someone else, in particular to a non-family member. This clause will make it possible for you to either pay off the mortgage in full or sell the property in full. When family members inherit land, they will usually expect mortgage payments instead.
  • Reverse Mortgage: In a reverse mortgage, which is a financial product common among older homeowners seeking to access their home equity without moving, the original owner earns on-going cash for home equity, repaying the loan after moving out. Upon the death of the original owner, the recipient often has a short period to repay the sum due—usually six months. You're going to have to pay the balance of your own money, sell your home to satisfy the loan, or get a new loan in your name to cover the amount you owe.
  • Underwater properties: if the property you are inheriting is underwater (meaning more is owed to it than it is worth), the issuing bank will agree to allow you to make a short sale at home, accepting less for the property than the remaining amount of the loan.
  • Mortgage paid off by the estate: since the person leaving your home may have had a mortgage on the property while they were living, it is likely that the mortgage would have been paid off by their estate, and you would have a free and clear home.
Does the property need repairs?
  • Repairs to sell: just like any home you'd buy for yourself, it's always a good idea to get a home inspection when you inherit a home. You're going to want to hear about any major ticket upgrades that need to be made before selling your home—think of the boiler, the foundation, the roof and the walls. Home inspections are between $250-$700, depending on the size of the home.
  • Rental repairs: Renters think less about the long-term condition of the property and more about creature comforts, such as new carpet and fresh paint.
  • Alternative: Consumers would want major repairs done prior to purchase. If you are interested in selling your home without major renovations, consider selling it to We Buy Homes Near You as-is with a free no obligation deal.
Are there multiple stakeholders in the inherited property?

It is very normal to inherit property from another stakeholder, such as a sibling or other family members. Of course, several stakeholders are making it more complicated.

Consider the following options:

  • Buyout: If one sister wants to keep her home and the other wants to sell, one will buy the other out, either in cash or by financing half of the value of the home. Out-of-pocket expenditures cover closing costs and valuation.
  • Promissory note: If you want to retain the house, your sibling wants to sell it, and you don't have access to a mortgage, you can record a promissory note that specifies how you'll pay your half of the home value back to your sibling—in monthly installments plus interest. You're basically going to buy your sibling over time, and they're going to get some interest income along the way.
  • Sale and dividing profits: possibly the most straightforward alternative, you and your sibling agree to sell your house, pocketing half of the proceeds after expenses and commissions.
  • Rent and share profits: if the real estate market is not solid, you may decide that it makes more financial sense to rent the house. You and your sibling will have pocketed whatever benefit is left over from monthly rent, repairs and property management costs.
  • Suit for partitioning: If the parties cannot agree on what to do with the house, you would have to get the courts involved by filing a partitioning case, which effectively asks the judge to order the selling of the home. This can be a timely and costly operation, with legal costs lowering your earnings well below what you would have pocketed from selling in the first place.
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Tax implications

Do I have to pay taxes on hereditary property?

When you hear that you've inherited a home, you're probably wondering: do I have to pay property inheritance tax? The act of inheriting property does not create any immediate tax liability, but what you plan to do with the house—move, rent, or sell—will cause you to incur property taxes, capital gains taxes, or other expenses (more on that below).

What are capital gains taxes?

  • Capital gains taxes are taxes you pay to the federal government on the basis of income you receive from the selling of the investment. For example, capital gains taxes are charged on the difference of what you initially bought the property for and what you're selling it for (usually you won't pay capital gains taxes on the sale of your primary residence for as long as you've lived there for two of the last five years).
  • If you should have to pay taxes on capital gains, the rate is dependent on your taxable income. In most cases, when you inherit a home, you will be shielded from the bulk of taxes on capital gains because of what is called the step-up tax base.

What are step-up taxes or the step-up tax basis?

As the beneficiary of the inherited property, you will benefit from a step-up tax base, which ensures that you will inherit the home at fair market value on the date of the inheritance, and you will only be taxed on the profits between the time you inherit the home and the time you sell it.

For example, let's assume that the house you just inherited from your grandma was originally bought for $25,000 in 1960. If the house is now worth $425,000, does that mean you're going to be taxed on a $400,000 profit when you sell your home? Luckily, no, no. You will only be taxed on profits in the brief period of time between inheritance and sale.

What you intend to do with your inherited property is linked to the financial status and physical condition of the property, along with any time constraints.

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