We understand selling the home of a loved one no longer with us can be challenging. Inherited real estate often comes with strong emotions, as we associate places with memories. In addition to navigating through the grieving process, deciding what to do with your inherited real estate is complex. Before making any decisions, take some time to learn about selling inherited real estate.
Why people inherit real estate
People choose to bequest their homes for various reasons. It could have been their primary source of wealth, so they viewed it as a way of passing on their life savings. Others leave the property in the hope that ownership will continue a family legacy.
In reality, not all heirs want to live in their inherited properties. Some may be concerned about the maintenance and upkeep of the inherited home and would rather downsize. Others find the property too far from where they currently live and work, eliminating the residence as a viable option. For some, selling is a necessity due to community restrictions, such as the property being in a 55 and over community.
As you contemplate how to handle the estate, take these steps.
#1- Consult an Attorney
Every state has a different probate process and regulations. Most properties must go through probate, but this is not always the case. For example, in Alabama some assets will transfer automatically upon an owner’s death with no probate required, as with rights of survivorship with a spouse. Additionally, if the deceased had a living trust to hold their assets, like a home, that may not necessarily go through probate.
In Alabama, different time frames and waiting periods may apply depending on the circumstances. If an estate’s value falls under Alabama’s Small Estates limit, which is $25,000, it’s possible to file a summary probate instead of going through a court hearing. Learn more about how to value the estate and determine if you qualify for this process here.
Your best option is to speak with a probate attorney to determine the right course of action based on your circumstances. Our real estate agents at Amanda Howard Sotheby’s International Realty can help navigate you through that process. We have the experience and the knowledge to guide you through seamlessly. At Amanda Howard Sotheby’s International Realty, we always with with Paulus Title because they are timely and great at what they do.
#2- Research tax implications
Another frequent question concerns inheritance or estate taxes for inherited property. Alabama has no estate or inheritance tax. However, the federal government does have taxes on the inherited property or the proceeds of its sale.
The majority of inherited estates fall under the IRS estate tax exemption threshold. Additionally, the stepped-up tax basis enables heirs to take advantage of low capital tax gains when selling inherited real estate. For this to apply, the total estate value must be under $11,200,000. Learn how the stepped-up basis tax works.
Again, speak with a probate or tax professional to determine the tax implications of your inheritance and potential sale.
3- Maintaining the Home
As you navigate through the grieving process and the loved ones’ probate, be sure to maintain the property. Unfortunately, some individuals target abandoned estates for burglary or occupation. Keeping the home maintained signals that the property is being monitored and prevents unnecessary damage that could impact its value once you determine how to handle the estate.
Do your best to keep the property in a livable condition. Continue to pay the utilities and the insurance, even if the home is unoccupied. Arrange for lawn maintenance and regular checks of the interior. A simple security system could deter unwanted visitors and add value to the home should you decide to sell.
4- How to sell the home
Once you decide to sell, you have two choices: sell the home “as-is” without any updates or repairs, or renovate before selling.
The best option for you depends on the home and your personal circumstances. Well-maintained properties can likely be put on the market with little work. Otherwise, consult with a real estate professional about if renovation is worth the expense. Your Amanda Howard Sotheby’s International Realty professional will help you decide on the right choice for you.
Regardless of your decision to sell “as-is” or to renovate first, you need to remove the personal belongings. For individuals without the time or energy, an estate sale is an option to divest of the belongings. An estate sale company assesses the home’s assets and determines where they should be sold. They oversee the sale and can assist with clean-up afterwards.
Inheriting real estate
Decisions about inherited real estate should not be made lightly. Be sure to set aside time to take care of yourself and process the loss in your way. When you are ready, rely on a compassionate real estate professional with experience selling inherited real estate. Let the team at Amanda Howard Sotheby’s International Realty serve as your advisor through the decision-making process. We are here for you in whatever capacity you need.