Your last surviving parent passed away, leaving you and your siblings with a house to deal with. Real estate property in an estate is often a complex matter, especially if all the heirs don’t agree on how to disperse of it. You may want to sell the property and one or more of your siblings may want to keep it. It’s important to know what you can do and how to handle your share of the property. In most cases, you will need to go through probate to disperse all of the property of the decedent, including their home.
Probate is a lengthy process, which will require all the debt of the decedent to be paid before the estate can be settled. Estate taxes and any federal tax must also be paid. Creditors must be notified and the entire process may need to go through court, depending on the state statutes. In some cases, there may not be enough money to pay the debts unless the house is sold. Assuming this is not the case, you may wonder how you can sell your part of the inheritance.
Can I Sell My Share of Inherited Property?
If you want to get rid of the real estate you inherited and your sibling wants to keep it, you have a few options to make both of you happy. First, you can agree to transfer your part to your sibling if they can get a loan. Second, you can decide to set up an arrangement where they will be paying you monthly for your part of the inheritance. This would give you steady income and a return on your investment over time while allowing them to keep the home. Just set up the agreement as you would with other buyers.
Another option it to turn the real estate into a rental with your sibling managing it if you don’t want to take on the responsibility of a landlord. With a paying tenant, you would have a regular income, which could be valuable if you’re nearing retirement or want to make a return on your investment.
It’s important to know that you may have to pay an inheritance tax on the property or a federal estate tax for the value of the real estate if you keep the property.
What Happens When You Sell a House You Inherited?
When you sell your home, you may be required to pay taxes. You might be liable for a capital gains tax, which is the difference between the value of the home when it was purchased and the value when you sell.
With an inherited house, you would only pay a step-up tax, which is the difference between the value of the property when you inherited it and when you sold it. The amount would be minimal if you sell right away unless you choose to make improvements, which increase the fair market value significantly. For example, say the value of the home is $100,000 when you inherited it. You make some updates and the value goes up to $180,000. You would only pay taxes on the $80,000 increase in value.
Can Siblings Force the Sale of My Inherited Property?
If you want to sell the house of the decedent and your sibling wants to keep it, you will need to come to an agreement or you may need to take it to court. Siblings can force the sale of the property in court. The court may appoint someone to list the house and split the profits between the heirs after the fees for selling have been paid. The house may be sold through a public auction or it may be listed as a traditional listing. You can be one of the buyers of the house at this point.
It’s far better to come to an agreement outside of court on your inheritance because you will lose profits by being required to pay a third party. If you can’t come to terms to allow one sibling to keep the property, you can allow the sale and you may be able to become the buyer.
Can Majority Rule in Selling an Inherited Property?
The short answer to this question is “yes.” If the majority of siblings want to sell the inheritance, they can take the issue to court. The court will require the home to be sold. Once the sale has been completed and the money has been added to the estate, it will be dispersed to the heirs as stipulated in the will.
The only way to prevent a sale in most cases is for all heirs to agree to keeping the property or to allowing one sibling to buy out the others. They can reach this agreement outside of court and create a document that specifies the terms so that it becomes a binding contract between the parties.