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Selling an Inherited Home

Selling an Inherited Home

Selling an Inherited Home

Your mom passed away or your father has to move into a nursing home. This is already an emotionally stressful time, but to add to the stress, you now have to figure out how to sell their biggest asset: their home. Ultimately, it is your friends and loved ones who'll help you through the hard times personally, but to help you with the home sale part, we've tried to break down the process for you a little bit.

First things first, it's important to understand the taxes. And the specific tax laws you're going to want to get up to speed on are around capital gains. This is an area where you definitely want to consult an expert, however, the 20-second version is that The basis for determining gain or loss on your inherited property is going to be the property's market value on the date of the decedent's death. This is the number from which your profit on the home will be determined.

For example, say the property was worth $200,000 when you inherited it. If you sold the property for $220,000 and had no selling expenses, your gain on the sale would be $20,000. But it's important to note that Inherited property is considered to have a long-term holding period, which means you'd likely qualify for the preferential tax rate of 15%. Therefore, your maximum tax would be $3,000. Although it could be lower if you have no or little income.

Given the complexities of how capital gains laws work, we'd highly recommend you consult with a lawyer or an tax accountant who really knows the tax laws in your state. You want someone who works with these laws on a daily bassis, who really knows their stuff, to lean on for more professional advice. Even if you just meet with somebody for a few hours, it will likely save you big in the end.

In addition to knowing the tax laws around selling your inherited home, here are some things to be aware of as you move forward:

Getting the Home in Your Name: The first step in selling a home you have inherited from a family member is getting the home in your name. If the home is in the trust, this is rather easy to carry out. You need to contact the trustee and schedule a transfer of the title. If the property is not in the trust you must go to probate court to have it transferred. In most states the only asset that must be sent through probate is land. The property cannot be put in your name until you provide either Letters Probate or Letters of Administration. Probate on just a home should only take a couple of months provided there is not anything contested with another party. Court approval is required to transfer title from the deceased to you so you must take these steps if your name is not currently on the title or things are not set up in the trust.

Appraisal: Get the home appraised and inspected to know the value and the condition. You need to make sure when getting an appraisal that the appraiser is state licensed. The home inspector should be state licensed as well. The cost of the inspection will depend on your state and the value of the home.

Home Modifications: Even if the house is more porcine than beauty queen, she's still a pig you can put lipstick on. And doing so, will make a difference. Specifically, you should fix and clean up the home to get it ready for sale. Use the inspector's list to decide which things will need attention now that will be important to the buyer. Pay close attention to these things listed below:

Outside: How the house looks from the road is the buyer's first impression. Remove all debris and clean out the gutters. Plant new flowers if needed to add a little color. If there is grass make sure it is green and healthy.

Inside: Fresh paint and carpet, painting can be tedious but it makes a home seem fresh and new. Make sure to paint neutral colors so the home appeals to everyone. The carpet should either be new or professionally cleaned. Make sure if you do not replace the carpet that there is not any stains or damage anywhere. In particular, the kitchen is a huge selling point. So updating all counters, fixtures, and cabinets can go a long way. An easy way to make a dated kitchen look new without the cost is to replace all the hardware on the cabinets.

Keep the House Safe: While not talked about frequently enough, inherited homes, which don't always have full-time live-in residents, can be prime targets for break-ins. And while keeping the house in good shape & making sure the possessions your loved one had are safe isn't something people talk enough about, it is important. So you might think about reading home security reviews on review websites like ConsumersAdvocate.org - and seeing if a security system makes sense as a means to protect your recently inherited investments.   

Create a Plan: You don't have to be a marketer or a real estate guru to create an effective plan to shop your house around. Start by writing out a list of selling points for the property. These will be the main points of focus in your listings. Write a list of all the places the home will be listed for sale. Make sure to include newspapers, websites, and passing out flyers. Take detailed photos to showcase the home inside and out.

Finding Buyers: Have a series of open houses. Make sure to have flyers for the perspective home buyer to take home for review. You can also contact local investors and let them know the home is for sale. Make a slightly lower price for cash buyers to try to entice a quick sale without loosing too much money. Be sure to be ready to negotiate. Also, don't be afraid to place a full price counter offer if the home is priced competitively for the market.

Reviewing Offers: Even if you're a real estate expert or a lawyer, it never hurts to have a professional who really knows what they're doing look at the terms of the sale. You've gone this far, and you have an offer in front of you, so don't be hasty. It's imperative to make sure all the t's are crossed and i's dotted.

Inspection: Once you've accepted and offer, the buyer will have an inspection and appraisal done. If you have already had this done this, there will be no hidden surprises. The buyer may make requests to have some things fixed as needed. Once everything is an agreement, the next step is to sign the title, escrow documents, and wait for it to close.

Selling a home you inhert can be a stressful ordeal, but the reality is you or one of your family members will have to assume the responsibility. And when you do, if you want to maximize the money you make on the home and sell in a reasonable timeframe, it's incredibly important to do your homework and be prepared.




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