Inheriting a home from a family member can either be a great gift or a huge inconvenience depending on what the situation is and what you plan on doing with the home you’ve inherited.
Sometimes families will make the decision to move into the inherited home and sell the home they live in. Other times people who inherit a home will choose to sell everything inside the home [aka estate sale] and then sell the home itself.
If you’ve inherited a home in Orlando and have no intention of moving into it or renting it out then selling it is probably your best option. Especially if the property is in need of repairs or some upgrading and you’re just not in a position to make the necessary changes.
It can be very emotional process to sell a home that you’ve inherited from a loved one. Chances are that you grew up in the home or you at least spent a lot of time there during your childhood. The last thing you want is to make selling this home a stressful and costly experience. After all, I’m sure who ever left you the home, did it because they loved you and wanted you to benefit from it.
In this article you’ll find some helpful information on avoiding the typical hassles and pitfalls on the process and make selling your inherited home an easy and painless experience.
Florida Tax Implications of Inherited Property
If your recently inherited property was someone else’s homestead, the property taxes will go up unless you plan on making it your homestead. If the person who left you the property lived there for a really long time, then the property taxes will go up tremendously because they probably bought it at a fraction of what it’s worth today.
In the state of Florida there is an income tax concept known as “step up in basis” which basically means that instead of owning the property based on what your parents paid for it, you inherit it at the value of the date it was left to you. This is a good thing because when you sell you’ll be paying income tax on the profit between the basis and the sale price instead of paying on the difference between the original sale price and what you sell it for now.
Example: Dad buys the for $20,000 in 1980. Dad dies in 2015 and the house is now worth $120,000. You sell the house a year later for $140,000. You only have to pay taxes on a $20,000 gain instead of a $120,000 gain.
This law prevents adult children from owing large tax amounts on properties that have greatly appreciated over the past several decades.
Tax law can be pretty complicated to understand, so it’s best to get the advice of an attorney or accountant to discuss the obligations that come with inheriting real estate
Preparing for the Sale
After you’ve been made fully aware of the all the financial implications and you’ve decided to sell the home, you’ll need to get the home ready before selling it. Typically with an inherited property this means cleaning, de-cluttering and de-personalizing the entire home before showing it to potential buyers.
This is easily the most emotionally challenging part of inheriting a property, especially if it was the home you grew up in. Going through mom and dad’s personal belongings will most likely bring back a flood of memories from your childhood all the way to when you moved away from home. It’s best to get help from other family members for this part if possible.
After you’ve decided what to get rid of and what to keep, you might want to have an estate sale or yard sale to clear out the rest of the items. It’s always better to show a home that is clean and empty unless you decide to have it staged for the sale.
For some people in this situation, it may be tempting to hire a friend or family member that’s a real estate agent to represent you in the sale. This can be a huge mistake, especially if the agent is inexperienced in this type of sale. Your best course if action here is to hire an experienced Orlando listing agent in the area where the home is located.
Pricing Your Inherited Home
This is where you want to put your real estate agent to work for you. Pricing the home correctly from the start is extremely important in getting you highest dollar amount in the shortest amount of time. Your Orlando listing agent will prepare what’s known as a CMA or Comparative Market Analysis. This is a report that will help you determine your property’s value based on homes that are currently for sale, pending and sold in the surrounding areas.
Pricing your home too high will cause it to be on the market much longer than it should while pricing it too low can cause you to lose thousands of dollars in profit. That’s why it’s so important to hire an experienced Orlando real estate agent to help you through this process.
Keep Paying The Bills Until the Home is Sold
Even though you’ve been diligent in taking care of the legal paperwork, getting the home ready and listing the property for sale, you have to make sure the bills get paid. If there’s a mortgage, make sure it gets paid on time. Also, make sure to keep paying the utilities and any other monthly bills associated with the home until you’ve sold it.