A loved one leaving you a home in their Will is a humbling and lasting legacy. It’s not just a valuable financial asset, but also a testament to their devotion to you.
In a real estate market that is becoming increasingly inaccessible to the younger generations, bequeathing a house can provide a sense of security as well as a place to call home. As monumental as this gift is, it isn’t always possible for the beneficiary to keep in their name.
Sometimes, the location isn’t quite right, especially for a working homeowner who commutes every day. Or perhaps the maintenance costs are too much for someone just starting out in their career. Let’s take a look at some of the challenges and implications of selling an inherited home.
An accurate, unbiased assessment will give you a starting point for an estate sale. Book a complimentary home evaluation here.
Is There an Executor?
The love of your family is simple; inheritance law is much more complicated. Though the legalities are beyond our area of expertise as real estate agents, and we strongly recommend seeking legal counsel, we can give you an overview of the process.
When a loved one passes away, there will generally be an Executor or Estate Trustee to manage their estate until the Will can be settled. If the deceased did not arrange it in advance, the courts will typically appoint someone. The Executor is in charge of assessing the estate, applying for probate and then distributing any inheritances to the beneficiaries.
Do you need more help arranging an estate sale? The posts below can help you prepare:
- Preparing to Sell Your Parent’s Home
- What Resources Are Available When Selling a Family Member’s House?
- Selling a Home for Someone Else? Here’s What You Need to Know
Has Probate Been Completed?
Before the Executor can do anything at all, the courts first need to grant probate. This means authenticating the Will and giving the official go ahead to distribute the assets.
Probate can take time as the courts are often backlogged, so it’s important to apply as early as possible. If anything in the Will is contested, the process can be drawn out even more. Fortunately, many issues can be avoided by working with a lawyer to draw up a Will that is clear and well-defined.
In addition, it is often possible to avoid probate altogether. For example, ownership of a house automatically transfers to the surviving partner as long as the title is set up as a Joint Tenant. Under Tenants in Common, the deceased’s portion will need to go through probate before it can be sold or transferred to the other owners – even if their names are on the title.
Once again, we recommend speaking to an experienced attorney to ensure your wishes are followed. Many assets, such as bank accounts and investments, also allow you to designate a beneficiary, which automatically transfers to the next of kin without the need for probate.
Will There Be Capital Gains?
Capital gains taxes can be a touchy subject when selling an inherited home. You and your family may be grieving, but the government still wants its share. Are they entitled to anything? It depends on the use of the property.
If the home was the deceased’s primary residence, it is exempt from capital gains at the time ownership changes hands. If the beneficiary does not currently own a house, and also decides to use it as the primary residence, it will also fall under the exemption.
When it’s an income property or a second home, capital gains gets a little more complicated. In this case, a portion of the increase in value from the time of original purchase will be subject to capital gains. The estate will pay these taxes before the beneficiary takes possession.
The beneficiary could also face capital gains down the road. If you already own a home and inherit another, that now becomes your second property. No capital gains will apply if the new owner sells the house at the appraised value at which they received it.
However, the property value will likely rise over time, which would lead to capital gains on a percentage of the increase if you decide to sell later. Taxes can be a complex subject, and it never hurts to reach out to a financial expert who can help you make sense of them.
A local real estate team can help you make the most of the sale with minimal stress or time commitments. The posts below can show you some possibilities:
- The Power of Staging When Selling Your Home
- Do I Really Have to Update My Home Before Selling It?
- Minor Upgrades, Maximum Results
What Is Your Timeline?
Unless a beneficiary plans to use the home as their primary residence, a fast sale is usually a high priority after a loved one passes away. However, you also don’t want to devalue the home in your efforts to settle the estate quickly.
You may not have time to prepare as thoroughly as you would for a normal transaction. Luckily, there are still small ways to make the house appealing to potential buyers.
Extensive cleaning and decluttering are an excellent start as they remove distractions and showcase the home in a better light. To further enhance the effect, consider minor repairs such as fresh paint, updated hardware and light fixtures as well as some light landscaping.
It sounds simple, but it can also be easier said than done when emotions get involved. No matter how hard you try to stay objective, going through your loved one’s belongings can be painful. Making decisions about renovations is also challenging, especially when you know your family member liked everything a certain way.
If you’re struggling with preparing the home for sale, either through lack of time or for emotional reasons, remember that you can always reach out for help. Friends and family members are invaluable during this time. With the right support, there’s almost nothing you can’t get through.
Are you looking for professional guidance in managing an estate sale? Our compassionate agents in Hamilton & Burlington are here to support you and answer any questions. Connect with us today or call our offices at 905-332-9223 to learn more.
