Inheriting a home is an interesting situation—for some, it’s a welcome gift. For those hoping to sell, it can be a daunting task. If you’ve recently inherited a home that you’re considering putting on the market, you’ll need to know the basics before getting started. Here, we’ve listed a few tips to help you sell an inherited property.
Keep an Eye Out For Common Problems
There are several common obstacles that beneficiaries face when they inherit property. A few of the issues to watch out for include a home that’s worth less than the amount owed, or a house that was left unattended for years and needs significant repairs. If you’re faced with any of these obstacles, it’s wise to carefully weigh your options before accepting the inheritance or choosing to move ahead in the selling process.
Price the Home Competitively
When you inherit a property that you intend to sell, it’s understandable to set your sights high—especially if the home that you’re listing has significant emotional value. While it’s true that Seattle’s housing market is booming, it’s still important to price the property realistically. There are several strategies to consider, including listing the home at market value, or pricing it for less than it’s worth to inspire a bidding war. The route that you choose is up to you and your realtor, so be sure to connect with an agent as soon as you decide to sell the house.
Be Aware of Tax Laws
One of the most confusing and frustrating aspects of selling an inheritance is sifting through the tax laws. Your decision whether to keep or sell should be based upon a solid understanding of the law. For instance, you should be aware that inherited homes are not eligible for the $250,000/$500,000 home sale tax exclusion. However, you may benefit from a stepped-up tax basis, which typically allows the beneficiary to pay lower capital gains taxes.
Plan to Report the Sale
While it’s not required in all cases, it’s usually best to report the sale of an inherited home to the IRS. Before you fill out the proper forms, you’ll need to adjust the basis to calculate the correct amount of taxes to be paid. This varies for each individual situation, and if you’re ever unsure, consult with a qualified financial planner or real estate attorney. Your realtor may be able to point you in the right direction if you have questions about whom to speak with regarding property taxes and IRS reporting.
Selling an inherited home can be an excellent decision, but you’ll need to connect with the right team of professionals to facilitate a smooth transaction. One of the most important people you’ll work with is your real estate agent, and it’s essential to choose someone with in-depth knowledge of the market in your city. When you’re ready to get started with the selling process, get in touch with our team.