Selling an Inherited Property in Charlotte Metro

Inheriting property can present significant emotional challenges as well as financial implications. Are costly renovations and repairs necessary? What tax obligations will arise? Is there a will in place, or will the probate process need to be navigated?, inherited properties also represent a valuable opportunity for real estate investors and buyers seeking a property at a reduced price that they can personalize. What steps must a homeowner follow to sell an inherited property? Are there specific procedures to consider for this type of transaction? This article aims to clarify the process of selling an inherited property with the goal of achieving a profit.

How To Sell An Inherited Property in Charlotte Metro

If you have inherited a property and are uncertain about the next steps it is important to understand that in most states, the inherited property must undergo a probate process. This legal procedure allows the courts to establish the rightful owner. Probate involves the Court legally transferring ownership of the estate’s assets to or more beneficiaries and/or heirs. The duration of this process can vary significantly, depending the condition of the will (if one exists).

Determine the Executor

For inherited properties with a will, establishing the executor of the estate should be straightforward. One of the most important aspects of a will is establishing an executor that is able to carry out the deceased’s wishes through the process of probate.  Any assets listed in a will can’t be sold until the will is validated by the Court but, once approved, the executor of the will is allowed to act on the wishes of the deceased. But if the will is contested or there is no will, the process might take longer as the Court gets involved. 

The probate court will appoint someone not associated with the family as an administrator to the estate. These administrators play a similar role as an executor; they are responsible for carrying out the wishes of the deceased as stated in the will, as well as paying off any of the estate’s debts and distributing any assets. They may also determine if any real estate assets will need to be sold to pay off the estate’s debts, including back taxes, mortgages, etc.

Working with Lawyers and Real Estate Agents

Going through probate can be tricky, so having a skilled lawyer by your side is important to help you avoid problems when selling an inherited home. Once you get the green light from the probate court to sell, the next wise move is to team up with a real estate agent who knows the ins and outs of selling inherited properties. An agent with experience in probate sales will be aware of the specific rules and details related to this kind of transaction. They can assist you in locating the best buyer to ensure you get the most money for the inherited property. Additionally, they will provide valuable insights on what repairs or upgrades are worth your time and money, and what you should just leave as is. Taking their advice could mean the difference between a quick and profitable sale and being stuck with a home that lingers on the market too long and sells for less than it’s worth.

Resolve Any Debts

When you think of “inheritance,” do you picture a secretive great-aunt leaving you a fancy mansion in the woods, or do you realize that sometimes it means handling a property with problems like liens on the title, old unpaid taxes, and a mortgage that makes selling it tricky? Sadly, when someone you care about passes away, you often have to face their debts, which could include taxes, mortgage payments, or maxed-out credit cards. Any valuables you inherit must first go toward settling those debts before you can receive any money from the estate. Though a house may look like a big asset, it can also turn into a costly burden. A knowledgeable estate advisor can assist you in exploring your options for managing an estate.

Clean & Restore the Home

After you’ve taken ownership and the property is officially yours, the next thing to think about is what to do with it. You might want to live in it, rent it out, or sell it. Sometimes, when someone we care about passes away, they leave behind a home that needs a lot of work. It could be that the house hasn’t been taken care of for many years and requires a deep cleaning and repairs, or maybe it hasn’t had any updates and needs a full makeover to be ready for buyers. This is a part of inheritance that people often overlook.

Do all heirs have to agree to sell the property?

No, the Heirs do not need to agree to sell a house or property that they inherited if a will or the probate court has already confirmed ownership. However, if there is no established ownership, like in cases where there is no will or a Court-appointed administrator is involved, then all Heirs must come to a consensus about the sale. This situation also applies to properties that the Court has auctioned off to settle debts of the estate. If a buyer wins a house at auction but one or more Heirs disagree with the sale, the purchase will be paused until the disagreement is resolved and a settlement is reached.

How to Settle a Disagreement

When heirs don’t see eye to eye on an estate, there are several ways to resolve the issues, but the first thing to do is ensure there’s an executor. This person helps carry out the wishes of the deceased as stated in the will, which can prevent conflicts about how to handle the estate’s assets. If there’s no executor or if the will is being challenged, you might want to consider hiring a mediator. This neutral person can help everyone come to an agreement, and it’s usually a lot cheaper than going through a legal fight in probate court.

Best Practices

What if the problem arises from the executor themselves? Conflicts can happen when a family member is appointed as the executor or trustee of a will, leading to tension among other relatives. If you’re facing this situation, one solution is for that person to step down and allow an independent fiduciary, like an estate-planning lawyer, to manage the will. By having a neutral party take over, it can prevent arguments and give everyone time to process their feelings, which can help avoid lasting harm to your family relationships. 

How is inherited property taxed when sold?

In 2020, state and local governments in the U.S. gathered more than $5.3 billion from estate and inheritance taxes. That’s a huge amount! Since laws and rules vary from one state to another, it’s important to do your homework. If you receive an unexpected inheritance or are preparing your own will, make sure to talk to a lawyer who knows about taxes and estate planning.

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 exactly is the capital gains tax, and which states require it? The capital gains tax is a fee you pay on the increase in value of any assets that someone inherits through an estate. However, this tax only kicks in when the asset is sold for a profit, not when it’s inherited. You’ll pay this tax on the difference between how much you sell the property for and how much it originally cost. Most states do expect you to pay this tax on inherited property, but there may be cases where you can avoid it if you sell for less than a specific amount. For instance, in Washington State, there is no capital gains tax on homes or properties sold for under $250,000. Additionally, there are other legal methods to lower or avoid the capital gains tax in your state, like using the money to buy another property. It’s a good idea to talk to a tax attorney who understands the laws in your area before you sell your property.

Estate Taxes

An estate tax is a fee that gets paid from the estate to the government before anyone can inherit anything. Are you worried about losing a big chunk of the estate? Don’t stress! In 2023, the estate tax kicks in only if the estate is worth over $12.92 million for individuals. This means the government can’t charge you an estate tax unless your total taxable estate is more than $12,920,001. Everything below that amount can be passed on without any tax. Even though the threshold is quite high, more states are getting rid of their estate tax laws every year, which means they are missing out on a lot of money.

Inheritance Taxes

Only six states impose an inheritance tax, which means you are probably among the fortunate majority who won’t have to face this issue. However, if you reside in one of these six states—Maryland, Nebraska, Kentucky, New Jersey, Pennsylvania, or Iowa—you will need to pay taxes on any assets and properties you inherit as a beneficiary or heir. The good news is that even if you live in a state with an inheritance tax, you won’t owe anything if the person who passed away was from one of the 44 states that do not have this tax.

Documents required to sell an inherited property

To prove that you own a property and are ready to sell it, you will need copies of the court documents that show you have the legal right to be the executor or administrator of the estate. These papers will confirm your authority to handle the inherited property. When you find a buyer and are set to finalize the sale, you’ll require the deed, title insurance, or other important legal papers to confirm that you legally own the inherited property. 

Make sure to check what extra documents you might need to sell an inherited property! Some places might ask for additional paperwork related to the property, like earlier surveys, inspection reports, or any other important documents that relate to the property’s condition or history.

Is there an easier way to sell?

Absolutely! Neighborhood Property Group NC is a trusted home buying company known for purchasing inherited properties for cash, making the process easier and more affordable. Reach out to us today for a fair cash offer on your inherited house, condo, or property. We buy homes in any condition and can assist you through the tricky steps and stress of selling a house in probate! Let us simplify your home selling journey so you can focus on what’s next in your life.