Why Selling an Inherited House May Take Longer

ST. PETERSBURG, Fla. — Selling an inherited house may be harder than you thought it was going to be because of the probate process. Your family might be unsure about who to sell to or how much you should sell for. Knowing about these issues early can make the process easier.

According to New York Life, only 42% of Americans expecting to receive an inheritance feel that they're very financially comfortable handling the wealth. It shows us that more than half of the people who get properties from their loved ones are facing a harsh reality.

Selling a house you inherited might be a good option for you, but you'll face real estate challenges. Let's cover why these issues come up and give you tips on what to do.

What is the best way to inherit a house from you parents?

Even before you decide to sell a house you'll inherit, you may be thinking about how you should go about the process. Having a clear plan is often the best way to avoid issues later. It'll be helpful if whoever you're inheriting from has such a plan. Their preparedness may help you find it easier to sell the house when you're ready. Legal obstacles become easier to overcome when you have enough documentation.

Why selling an inherited house takes longer

If you've ever sold your own home, you probably didn't wait long to close, especially if you were in a hot real estate market. The obstacles multiply when you try to sell an inherited house for many reasons.

Probate court: Probate is the procedure of changing ownership, and it's supervised by the court. The home you inherit will most likely go through the probate process, and you have to wait until it's over. You don't fully own the property, so you can't sell it legally.

You can expect the probate process to last for a few months or sometimes over a year. It's one of the major causes of real estate delays affecting people trying to sell houses they inherited.

Multiple heirs: An inherited property, especially one from parents or grandparents, is rarely passed to just one person. You might be sharing ownership with some of your siblings or other relatives.

It means that you can't make any major decisions without asking for their opinion and approval first. If one of the people you share the inheritance with is hesitant or slow in giving their feedback, the property sale will stall.

Property condition: Buyers looking for homes in our current inherited property market mostly prefer places they can move right into without spending their money or time fixing them.

You may need more time to sell a house if it requires some updates or repairs.

How much tax do you pay if you sell an inherited house?

Taxes may end up being the most confusing thing you deal with when selling an inherited house. You won't pay income tax on the inheritance itself, but you may owe capital gains tax.

If your parents paid $100,000 for the house when they bought it, but it was worth $250,000 when you inherited it, your taxable gain will be the profit you make above $250,000.

It's always good to talk to a tax expert before you list the house. They'll give you helpful home-selling tips so you can avoid making mistakes that will cause you to get in trouble with the IRS.

FAQs: How do I avoid capital gains on an inherited property?

It's possible to avoid or lower the capital gains you pay if you're strategic. Using the house as a primary residence for at least two years is a wise move because it helps you qualify for a home sale exclusion. If you wait too long to sell a house you inherited, its value may increase. Being quick to act is a good way to lower the capital gains tax you may pay later if you sell at a much higher price.

Is it better to keep or sell an inherited house?

Sometimes it's better to sell a house you inherited, and in some cases, you'll be better off keeping it. You can keep the home if it doesn't have a mortgage.

It's also a good option if you don't want to lose it entirely, since you can rent it out to make money. A house that needs a lot of costly repairs may drain you, and you might find that selling is less stressful.

Always think about your long-term goals before deciding what to do.

Can grieving affect selling an inherited house?

Yes. Selling the home where your parents or grandparents lived can be tough because it's not always easy to let go.

Your family members may be hesitant about making the decision when mourning the loss of their loved one.

Make an inherited home sale easier

Selling an inherited house may not be easy because you have to go through the probate process. Your family's input also matters, especially if they're also heirs. While you'll face different challenges trying to sell an inherited house, there's a way to overcome each one.

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