There are difficult decisions to be made when you inherit a house. On one side of the coin, you must deal with the emotional loss. On the other hand, you must gather yourself and get ready to deal with financial & legal matters associated with the inherited property.
This article will be your guide to help you navigate through the probate process so you can sell your inherited property in Fairfield County.
Can You Sell the Inherited House?
Inheriting a property is one thing.
Having the permission and the right to execute the sale of the house is an entirely different thing. Read the legal documents and make sure that you are getting the house ‘clear & free.’
In some cases, there will be a pending mortgage or multiple mortgages. An existing mortgage can prevent you from selling the property. You will either have to refinance the property or pay money from your pocket to cover the mortgage expenses.
Other than lien issues, you cannot sell the property before it goes through the probate process. You can escape the probate entirely if the ‘small estate procedure’ applies. However, small estate procedure is only applicable if the value of the inherited estate is equal to a few thousand dollars. In Connecticut, this threshold is $40,000. So, if the total value of the left estate is less than $40,000; you can apply for a simple process. You can claim your share of inheritance by signing a simple affidavit. However, if that is not the case, the estate must go through the probate.
Tax Implications of Selling an Inherited Property in Fairfield CT
When selling an inherited house, you cannot enjoy exemption from the Home Sale Tax. The general law is that you do not pay the Capital Gains Tax if the value of your house is $250,000 or $500,000 if you are married. However, this limit does not apply to inherited assets for a good reason.
If you inherit a house that was bought years ago, its price must have appreciated dramatically. A home worth $175,000 in the 1990s might be worth well above $500,000 now. If the Capital Gains Tax is applied, you will pay tax on the extra $250,000.
To prevent this from happening, you can take benefit of the ‘stepped-up in basis rule.’ In that way, the tax basis is the value of the house at the time of the death of the deceased person. For example, $500,000 will be considered the tax basis and any price increase will be taxable. That means, if you sell the house within months of inheriting it, you will pay a very negligible amount for the Capital Gains Taxes.
Inheritance Tax & Estate Tax
There is no inheritance tax in Connecticut. That means the beneficiaries do not pay any tax after owning their share of the estate. There is also no income tax due on inheritance gifts. The only exception, in this case, is the transfer of retirement accounts.
A state estate tax is due (it falls on the estate) if the value of the estate is more than $2 million. There is also a federal estate tax applied. The federal estate tax exemption in 2018 is $11.2 million. In 2017, this amount was $5.49 million.
Preparing to Sell Your House
The executor will ask you to prepare the house for sale. You can hire an agent or a probate attorney. It can be a general sale or a court-held auction where interested parties will present a bid.
Appraise the Property
Selling real estate in probate is no easy task. You must hire two independent appraisers to evaluate the market value of the property. After that, it is crucial to make essential repairs and renovate the house. You can choose to sell your home as-is. In that case, you need to advertise it exclusively, and if there are other shareholders, they must agree to an as-is sale of the property.
Selling Your Home As-is
A reliable cash buyer will understand your situation. They know that selling an inherited house is a multi-step process and it can be overwhelming to deal with repairs, renovations, commissions, legal work, taxes and the paperwork. As the homeowner, you want to get rid of the burden of this property and move on with your life. Sure, inheriting a house can be a significant gift but the emotional loss and the task of maintaining another property can be extremely stressful for you.
Considering this situation, it is best to find a cash buying firm in Fairfield CT and sell your house as-is for a cash price within 14 days.
You do not have to make repairs. There is no need to clean the property. Submit this form to get an offer. A reputable cash buyer will handle the rest.