It’s always an honor to have a loved one trust you enough to bequeath their property to you upon their passing. But honor doesn’t remove the challenges that will come with managing or caring for their home.
Perhaps you’d been renting and, now with this inheritance, you have a home to call your own. But what if you already have a home (and all the financial responsibilities that come along with it)? Or maybe the house is located in a place you don’t care to live, or you’re simply not at a point in your life where you can take on the role of a homeowner?
In this case, selling will most likely be your best option. However, there are a few things you’ll need to consider before you embark on your journey to sell an inherited house in Florida.
Selling a home you inherited in Florida could leave you either holding the bag and owing taxes to the federal government or due a tax deduction on your yearly income. It’s all going to depend on the value of the home, the final selling price, and the timeline of the sale in relation to your relative’s death.
If you want to avoid the tax altogether, you can live in the house for a period of two or more years. Then, any profit you make from its sale after that time will no longer be subject to the capital gains tax. (Note: This exclusion maxes out at $250,000 profit if you’re single and $500,000 profit if you’re married).
Selling the property, though, is considered using it for “investment purposes,” and you will be taxed on any profit you make from the sale. These taxes will be calculated based on the sale price in relation to the “stepped up basis” (full market value) of the home at the time of the sale.
For example, if your loved one purchased their home for $150,000 originally, but it is currently valued at $275,000, then you could sell it immediately upon your inheritance of it for the current market value of $275,000 and pay no capital gains tax. But say you wait a year and sell it for $300,000; you will then owe taxes on that $25,000 profit.
It is therefore in your best interest, if you plan to sell an inherited home, to do so immediately upon taking ownership of it, unless you plan to live there for a few years first. Otherwise, you may get hit with taxes that you can’t afford to pay right now. Regardless of which route you go, make sure you report the sale to the IRS and properly file the sale as a gain or loss on your tax forms to avoid any trouble down the road.
Preparations to Sell an Inherited House Fast in Florida
To get ready to sell an inherited house in Florida, you’ll need to prepare the property just as you would with any other home you’re trying to sell. Be aware, though, that the added emotional complication of it being the home of someone you loved who has passed on can be very draining and difficult.
Depending on the state of the home, this step can also be very time-intensive. You’ll need to come prepared to make decisions about what to keep and what to donate, sell, or throw away. When sorting your loved one’s belongings, take the opportunity to reminisce and make sure to set aside any treasured items or memorabilia your family would like to have to remember them by.
After this step, an estate sale is a great way to liquidate items your family isn’t interested in keeping. Depending on your available time and budget, you can organize this yourself or hire a company to do it for you. Once the sale is complete, remove any remaining items from the home and sort them for donation or disposal, so you can move on to the final step of preparation: cleaning.
Again, depending on the way your loved one kept their home, this step could require a straightforward tidying up or a deep clean. You want the home to be at its best before you entertain offers from potential buyers, so if the scope of the mess is beyond your capacity to remediate, you may want to bring in backup in the form of your family or even hire a company to do a deep cleaning.
As you can see, you have a bit of work on your plate if you’re looking to sell an inherited home in Florida. But it doesn’t have to drag out forever! Once you’ve made up your mind to sell and taken the steps necessary to empty and prepare the home, move forward and unload it quickly to avoid getting hit with a major tax burden.
The Buys Guys purchase homes all over Florida, and we’re ready and waiting to help you sell an inherited house. Contact us today, so we can get the ball rolling and help you sell your inherited house in Florida for cash now!