Selling an Inherited Property in Omaha NE
Inheriting a property can be challenging both emotionally and financially. You may need to consider expensive upgrades and repairs, as well as the potential tax burden. Additionally, you might have to navigate the probate process if there isn’t a will. Despite these challenges, inherited properties offer excellent opportunities for real estate investors and buyers seeking discounted properties to personalize. So, what does it take for a homeowner to sell an inherited property? Are there special steps involved in this type of sale? This article will guide you through the process of selling an inherited property, aiming to help you make a profitable sale.
How To Sell An Inherited Property in Omaha NE
So, you’ve inherited a property and you’re unsure about what comes next. In most states, inherited property typically goes through a probate process where the courts establish the legal owner. Probate involves legally transferring ownership of the estate’s assets to beneficiaries and/or heirs. The duration of this process varies based on whether there’s a valid will.
Determining the Executor
If there’s a will, appointing the executor should be straightforward. The executor is crucial for carrying out the deceased’s wishes during probate. Assets listed in the will cannot be sold until the court validates it. However, if the will is contested or absent, the process can be prolonged as the court intervenes.
If there’s no designated executor, the probate court appoints an administrator. This person oversees executing the deceased’s wishes, settling debts, and distributing assets. They may also decide if real estate assets need selling to settle debts like taxes or mortgages.
Working with Legal and Real Estate Professionals
Probate is complex, necessitating an experienced lawyer to navigate potential pitfalls, especially when selling an inherited home. Once the court approves the property’s sale, collaborating with a real estate agent experienced in probate sales becomes crucial. They can guide you on repairs worth investing in to enhance the property’s value, maximizing your sale proceeds.
Resolving Debts
Inheritance isn’t always about windfalls; it often involves settling debts like liens, back taxes, or mortgages before beneficiaries receive anything. An estate advisor can help explore options for managing these financial obligations.
Cleaning and Restoring the Home
After settling ownership and addressing any outstanding issues, you’ll decide whether to live in, rent out, or sell the property. Inherited homes often need cleaning, repairs, or even major renovations to make them marketable. This aspect of inheritance is often overlooked but crucial for maximizing the property’s value.
Navigating these steps with professional guidance can ensure a smoother transition and optimal outcome when handling inherited property.
Do all heirs have to agree to sell the property?
No, the Heirs don’t have to agree to sell an inherited house or property if ownership has been established by a will or the probate court. But if ownership has not been established, such as with an estate with no will and/or a Court-appointed administrator, then all Heirs must agree to the sale. This also includes properties that have been put up at auction by the Court to pay off the estate’s debts. If a buyer purchases a house at auction but one or more of the Heirs disagree with the sale, the purchase must be put on hold while the disagreement is worked out and a settlement is reached.
- How to Settle a Disagreement
There are a variety of options for settling disagreements among Heirs over an estate, but the first step is making sure that a loved one has an executor. Having a point person who is there to make sure the deceased’s wishes are followed as set forth in the will can ensure that there are no arguments over how the assets will be dealt with. If there is no executor and the will is being disputed, your next step may be hiring a mediator. Having a neutral third party to help work out differences will be much more affordable than a legal battle in 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! Fort Street Homes 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.
If you own a property that’s stuck in probate that you are ready to sell, call us at (402) 813-7318 day or night to get a competitive cash offer for that inherited home. We buy properties in any condition and no matter what the estate’s financial situation might be. 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.