Inheriting a home gives friends and family members something to remember their relatives who passed away with. However, sometimes, it becomes inevitable to sell off the property. Selling inherited homes may be a source of anxiety and stress for people who may neither have experience nor the knowledge to successfully sell a house. To make your work easier, we have prepared this easy guide to help you sell your inherited home.
Tax Implications For Selling An Inherited House
The government requires that you declare all sources of income for any fiscal period for taxation purposes. Selling a house, whether you bought the house or inherited it, is a source of income and therefore full declaration is required.
The home owner may have accumulated tax arrears from the past when he or she passed the house to you. However, the law exempts you from paying these taxes. The taxable amount is calculated using the fair market value of the home and the value of all improvements done after you took over the house.
Up to $250,000 of the proceeds in the sale of a home you have used for at least two years in the last five years is excluded from tax. If the house was owned by a legally married couple, this goes up to $500,000. However, inherited houses do not qualify for this tax exclusion given that you may not have lived in the property for the required period of time.
What To Do To Prepare For The Sale
First, you need to clear the house of any personal belongings. You should go through everything in the house and distribute items that may have great value to you or your family members.
You can opt to sell the remaining personal items through a yard or estate sale. Remember that you may choose to have some of the items, such as furniture, sold with the house.
The house you have inherited must go through the probate process before it can be sold. Some states may have a shorter process for smaller homes and estates worth below several hundreds of thousands. Here is some good information for the probate process in Albuquerque.
If the home was part of an estate left through a will, held in trust or jointly owned by siblings, a decision must be made as to whose responsibility it is to oversee the sale of the house.
After all of this has been done, a careful and informed selection of the real estate agent to assist with the process should be conducted. We recommend reading reviews on Real Estate Agents in Albuquerque to aid in the selection.
Pricing Your Inherited House And Negotiating Offers
Your primary goal is to make the most of the sale. Therefore, your pricing should be in sync with the market rates and should be low enough to attract potential buyers. The asking price should be higher than the amount you are willing to accept to leave room for negotiation. Avoid asking for ridiculously high prices as these scare away potential buyers. Your agent can assist you in deciding on the listing price of the house.
Valuing the house is important to avoid accepting offers that are lower. During the transaction, the buyers will offer you lower prices than they are willing to pay and therefore, you should engage in dialogue to come up with an agreeable amount. You should not jump at the first offer since you are likely to get several offers which should be evaluated carefully before giving your counter offer.
The agent you have selected should familiarize you with tactics used by buyers during the negotiation process to prevent falling for tactics that are meant to make you reduce your selling price.
What To Expect During The Sale
The sales process could take a long time depending on market conditions, the price, how good your agent is and the season. Understanding the process will help you in planning. Before the sale is closed, the house requires an inspection by a certified home inspector to bring to light any hidden problems which may affect the buyer later on.
When the house is jointly owned, disagreements may be experienced. In addition, these may also occur if the house was left under a will that advocated for equal distribution of the estate. In such a case, it is essential for you to deal with all these issues in a legal and amicable way. Remember that any existing obligations on the house have to be met even during the sales process.
Hidden Gotchas When Selling An Inherited Home
Avoid guilt through careful selection of property to be sold. You want to avoid disputes that ruin family relationships. Your agent can hold the property under probate for more than a year as you sort things out.
Since you may want to get the best deal, you may be required to repair the house before sale. However, you may choose not to accept the inheritance in cases where the house has accumulated taxes and mortgages or when you think that it is dangerous to inhabit the house.