A five, fifty, and twenty dollar bill on a table with tax papers and a pair of reading glasses.

Inheriting a house can be incredibly overwhelming. While it’s wonderful to know that someone you cared for trusted you enough to appoint you the caretaker of their home after their passing, it can also be a big financial strain.

There are a number of tax implications that come into play when you inherit a house. And they will vary drastically depending upon what you do next. Let’s break down the types of taxes you may be required to pay when you receive or attempt to sell an inherited house.

1. Estate Tax

This tax is thankfully one that most people don’t have to worry about. The current federal minimum for the estate tax to be levied is $11.8 million. In other words, the deceased’s entire estate (including all real estate, cash, and assets like stocks or bonds) has to add up to more than $11.8 million before the federal government will tax it.

A dozen states (Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington) plus the District of Columbia, however, do levy their own taxes on estates as well. The threshold for these is much lower than the federal minimum, but it still floats somewhere around $1 million.

2. Inheritance Tax

This tax is collected only at the state level. It has stipulations, and its application varies from state to state. As of 2018, six states collect an inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. The tax rate in each of these states is different and may be anywhere from one percent to 20 percent of the value of the house or other assets you’ve inherited.

There are exemptions, of course, and again, this tax is often not levied on those heirs whose inheritance is valued below $2 million. There are also allowances depending on your relationship to the deceased. No taxes are applied when a spouse inherits a property in one of these states, and of the six listed, only Nebraska and Pennsylvania collect taxes on property that’s passed from a parent to their child or grandchild.

3. Property Tax

When you become the owner of an inherited home, you will, of course, become responsible for the property taxes owed. You’ll keep paying these as long as you own the house. Depending on the location of the inherited home, this could mean having a significant new bill on your plate.

Whenever someone inherits a home (just like if they bought one), the property is reassessed at the current market value to determine what taxes should be paid on it. While many states do cap how much property taxes can rise from year to year, there is a decent chance this reassessment could bring an increased tax burden compared to what your loved one was paying before their passing.

Some states do allow for exclusions for spouses and children or grandchildren. But to receive this often involves reapplying for exemption programs, which can be labor-intensive and cost you quite a bit of time and energy.

4. Capital Gains Tax

This tax is the biggest factor at play if you inherit a house and want to sell it. If you sell an inherited house for more than its value at the time your loved one passed away, you’re going to owe taxes on that gain. If the house sells for less than its value, that is considered a capital loss, and you’ll owe no taxes.

Thankfully you’ll qualify for what’s known as a “stepped up basis” when it comes to calculating the taxes owed. Say your mother bought the home for $100,000 decades ago, but it’s now valued at $250,000. If you sell it for $275,000, you only owe taxes on a $25,000 gain, rather than owing a portion of the $175,000 difference between the original purchase and final sale prices.

There is also a way to make yourself exempt from this tax. If you make the home your primary residence for at least two years before selling it, you will qualify for an exclusion. This means you can sell it and keep whatever profit you make without having to pay anything in capital gains taxes.

Stay, Rent, or Sell?

When inheriting a property, you have a few options. You can:

  • Move into the home and make it your primary residence.
  • Rent the home out.
  • Sell the home.

Moving in can be a good option if the home is fully paid off and you could use a break from paying rent on your own place. Owning and living in the home, however, does mean you’re on the hook for property taxes and utilities, plus any upkeep. It also may not be an option if the house you inherit is located in a different geographical area than your current job and you’re unwilling or unable to move.

Renting could be a good fit if you already own your own home or you live in a different town or state than the house you’ve inherited. The funds generated from renting the home could offset the cost of upkeep and any tax or mortgage payments. Some people aren’t cut out to be landlords, though, and you’ll run the risk of tenants damaging the home or falling behind on payments.

Selling an inherited home is often the best available route for an heir. As mentioned above, consider how the capital gains tax will affect you before jumping into selling, but if you’re not prepared to live in the home or manage renting it out for the foreseeable future, selling it and getting it off your plate is usually the easiest solution.

The Buy Guys have worked with a number of sellers after they inherited a property. We work exclusively with individuals and can close on your property in just 30 days. If you’ve recently inherited a house and want to sell it, please call us today.

Hoarding is a complex disorder that affects upwards of five percent of the population. It can range wildly in severity.

The mildest version includes “pack rats,” or people who may save lots of small tchotchkes. They might have 30 years of back issues of their favorite magazine just lying around the house. On the more severe end of the spectrum are those who take in dozens of stray animals they can’t care for or refuse to throw out rotten food.

As you can imagine, the home of a hoarder can end up in a truly deplorable condition after years of ownership. So what can you do if you find yourself in this predicament?

Perhaps you or someone in your family suffers from hoarding disorder and you need to sell your home. Or maybe you’re dealing with an inherited hoarder house from a family member. We know it can be an overwhelmingly emotional situation full of challenges, but you do have options.

Problems When Trying to Sell a Hoarder House

1. Photos

Homebuyers these days are almost universally house hunting online. The importance of having photos with your listing cannot be overstated. But as you can imagine, taking photos of the interior of a hoarder’s home is no easy task.

Even if you can navigate the space well enough to take pictures, what you’ll capture is unlikely to entice potential buyers. You’ll most likely end up taking only external home photos, which won’t do you much good.

2. Open Houses

Hosting an open house can be an extremely stressful experience in the home of a hoarder. In addition to the anxiety it’s likely to cause for the homeowner, if they are present, it also presents problems for potential buyers. It can be incredibly difficult to look beyond that level of mess to see the potential in a home.

Beyond aesthetic issues, though, that level of clutter can be a serious safety concern. If your prospective buyers are spending more time watching where they step than looking at the home, your chances of selling aren’t going to be very good. Many open houses also fall on weekends, so the chance that children might accompany their parents is high, which increases the safety concerns exponentially.

3. Time Constraints

For many people trying to sell a hoarder house, time is of the essence. Undertaking the massive task of clearing out, cleaning, and properly staging a home in a dire condition isn’t something that can happen overnight, though.

The owner may be over a barrel due to mounting mortgage debt. Or they may be under orders from city officials to remediate or vacate the property prior to condemnation. Regardless, rarely will you have the luxury of taking your time when selling the home of a hoarder.

Your Options for a Solution

1. Bring in a Professional

Unless you’re very well-versed in home repairs and have a ton of time on your hands, remediating the issues that exist with a hoarder house is probably out of reach for you. This is so much more than a “weekend” project. You’ll need to bring in the big guns.

If money and time aren’t concerns, hiring a professional who deals specifically with hoarders may be your best bet. They’ll be able to help sort and dispose of all the clutter and get the house clean. Be aware though, that you may discover much-needed repairs once all the mess is cleared, and that means the added cost of contractors.

2. Sell As-Is for Cash

If you’re not up for a big cleanup of an inherited hoarder house or you’re crunched for time, your easiest and fastest option is to work with a cash home buyer. As long as you work with a reputable company, there is no risk to you, and you can walk away with cash in your pocket in a matter of days.

Once you meet with a rep, you can simply sign the papers and walk away. The mess, and any resulting repairs, will no longer be your concern.

It is hard to imagine anyone walking into a hoarded home and making an offer to buy it. That’s where we come in.

We pay cash for houses in any condition, and we know how to make the process painless. We gladly purchase homes that are in poor condition or, for one reason or another, might not be attractive to all buyers.

Because you’re not paying to repair or renovate your home in order to get the retail price or to cover closing costs and commissions, we can offer you a fair cash price that’s slightly below market value. Call us today, and get a cash offer in under 10 minutes.

 

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.

Taxes

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!