If you have recently inherited a home from a deceased loved one, you are faced with some tough choices of how to sell an inherited house while still facing the emotional process of grief and loss. This is certainly not the easiest of tasks and possibly could feel very unwanted with the recent passing of the previous owner.
Fortunately, there are professionals that will help ease and guide you through the process. A trusted estate attorney will be an absolute asset in working through the process. If you know you are intending to sell an inherited house, there are some important bits of tax law to understand while you prepare a home for the market.
Home Sale Tax Exclusion
Many are familiar with tax law if you are currently a homeowner or have previously sold a personal property. Tax law provides homeowners a tax exclusion of up to $250,000 on any gains received from a sale if the property is used as the main home for 2 of the previous 5 years. Notably, a married couple filing jointly can receive an exclusion of up to $500,000. The important part is that a home has to be your personal residence for at least 2 years before being eligible for this type of tax exclusion. Considering you just inherited the home, you will not qualify and there are a fair amount of costs in maintaining a property, especially one you do not intend to live in or that may be miles and miles away from you.
There is good news.
Stepped-Up Basis Rules
There is something called the “basis,” or an asset’s cost for tax purposes. The basis of a home = its cost, plus any improvements you make while you own it. When you inherit a home, you automatically receive a stepped-up basis. Because of the price difference from when it was first purchased, this will change the basis as most properties appreciate in value over time.
The basis becomes the home’s fair market value at the date of the previous owner’s death. This means that you would pay capital gains tax based only on the value of the property as of the date of the death. So let’s say the previous owner’s basis was a total of $150,000, but the house appraised after the death for $450,000. The house then sold for $455,000. The taxable gain is then $5,000.
You can determine a profit or loss by subtracting the basis from the sales price. When you sell a house for more than the stepped-up basis, you have a capital gain. When you sell the property for less than the stepped-up basis, it is considered a capital loss. If you don’t use the home as your personal residence, the capital loss is deducted, but only a maximum of $3,000 of such losses are deducted against your ordinary income per year. The rest must be carried over to the following years and deducted.
Because there are such tax laws involved in selling an inherited house, it would always be best to consult a professional adviser when determining how to move forward with a sale or how to manage the property and assets of the inheritance.
Sell to an Investor
When you inherit a home, the responsibility that comes after may not be worth all the hassle. Depending on how much work the property needs, you may even make as much as you would by selling with a realtor. The difference is the hassle is much less. Fixing the property up, waiting for the right buyer to come along, paying commissions and closing costs, having friends and neighbors walking through the house while it’s on the market, are all obligations you as a seller do not have to worry about with us.
We have helped many individuals wipe their hands clean of having to sell or maintain an inherited home by selling the property to us for market value. Priority Property Solutions wants to make a difference by offering cash within two days to anyone looking to sell a property without any repairs or obligations on their end. To get a no obligation cash offer, contact us here. To learn more about the process, watch our video here.
We have created a list of tips for state executors. Being the executor of a will is not something we all would wish to be. It is a great honor, but with it comes great responsibility. As an estate executor, you are charged with managing the assets and acting in the best interest of the beneficiaries, regardless of whether you receive any kind of return from doing so. It can be a long process, but it doesn’t have to be as daunting as it seems.
Here are 5 tips for state executors to help in the new role:
- The will is the key. As an executor or trustee, it is your responsibility to uphold the integrity of the will and its instructions. Read the will thoroughly to ensure you understand it completely. If necessary, have an attorney help you. This will help mitigate any problems with impatient or suspicious beneficiaries.
- Be proactive. If you are in charge of managing the property and assets, the heirs and creditors should be informed of the death as soon as possible. Collect the keys for any vehicles and change the locks on the house. Create a financial plan for the trust assets (with the help of an advisor if needed.) Large sums of money and assets will not best serve the beneficiaries by remaining in a savings account or otherwise underutilized.
- Do not by any means have any personal financial dealings with the trust. Even if you are in charge of managing the money and estate assets, you should never borrow or lend from the trust.
- Communication and transparency is paramount. The probate process can take some time and beneficiaries may want to collect their distributions immediately. Inform them of the process and keep a detailed record of any actions or transactions regarding the will. It would also be good to send regular reports to the beneficiaries to keep them in the loop.
- Don’t be afraid to seek guidance or help. You may have been selected as the trustee for a number of reasons, but this does not mean you have to take it all on alone. There is a great deal of responsibility in managing assets as an estate executor. If you should ever feel unsure of what actions to take, whether it is in the beginning, middle, or end, consult an attorney or advisor. It will help smooth out the process and ensure that you are also protected while trying to do the best job you can.
We hope our tips for state executors has assisted you in the new role you have acquired. As always, for more information on what we do at Priority Property Solutions, contact us here.
When selling a house, it can pose difficulty when hoarders are involved. The mess and the renovations necessary to sell the home make it nearly impossible for realtors. It can be overwhelming trying to sell under these circumstances. Want to sell a hoarder house fast? Don’t give up, we can provide you a solution.
It is our job at Priority Property Solutions to fix homes up, and houses affected by hoarders are no difference. We have no care what the condition is of your home, and it will not reflect receiving a cash offer from us.
What is a hoarder?
Hoarding is a very serious mental illness that occurs in someone living alone in a home for a long stretch of time. Many times an intervention is necessary. It’s actually very common, especially with senior citizens.
If I’m a hoarder, will you still present me a cash offer?
Just like any other property, we will offer you cash within 48 hours for your property. We have purchased homes from hoarders, and it can give them a new start somewhere else. Even if your home is categorized under the tear down properties, we can still provide you a quick solution.
When do I get paid for my home?
As soon as we go under contract, we can give you a closing date for within that month and pay you on that date. You do not have to wait on us to sell your home before you get the cash in hand. The responsibilities of fixing the home is 100% on us.
We have all come across someone struggling with a hoarding issue. If you are a hoarder or know anyone who wants to relocate or sell a hoarder house fast, please reach out to us to buy your house!
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower, who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan.
Unfortunately hardship approaches many people and puts them in the forefront of foreclosure. Although there is an impending doom associated with the process from the homeowner’s point of view, we can offer you a few tips on how to get through it.
Ask for help.
First and foremost, always seek guidance in the process. Many professionals assisted in getting you into the house, and there are more to help you get out. Non-profits are a big resource for this circumstance. Many times then can provide funding, or ways to get you out of the situation. The other way is to approach your lender. It may seem intimidating, but many times your lender may be able to finagle you into a different payment plan.
Cut Back on Debt
This may seem like an obvious one, but one that many people aren’t willing to do. It’s a humbling process, but we can get by with a little less. Assess your home and financials, and see if there is anything you can eliminate the cost of; maybe using only one car, shop for different insurance quotes, or cutback on cable/internet.
Sell Your Home
Before it’s too late, you can definitely sell your home to a cash buyer and put that towards the debt you owe. This is called a short sale. You should ask your lender ahead of time. We at Priority Property Solutions have offered this buy out to many clients facing foreclosure. In these situations, we have given them cash upfront for a home in any condition, and saved them a world of stress.
For more information on this topic or to contact us, click here.