Selling an Inherited Property in Massachusetts

Inheriting a property can be a challenging experience both emotionally and financially. Are you facing the need for costly upgrades and repairs? What about the tax implications? Does the property come with a will, or will you need to navigate the probate process? Despite the challenges, inherited properties present an excellent opportunity for real estate investors and buyers seeking discounted properties with potential. So, what’s involved in selling an inherited property? Are there specific steps to follow in this unique situation? This guide will walk you through the process of selling an inherited property, aiming to maximize your profit.

How To Sell An Inherited Property in Massachusetts

Have you recently inherited a property and find yourself uncertain about the next steps? Typically, inherited properties need to undergo a probate process in most states to establish the legal owner. Probate is a legal procedure during which the Court officially transfers ownership of the estate’s assets to designated beneficiaries and/or heirs. The duration of this process varies depending on the presence and content of a will, ranging from swift to lengthy proceedings. Find out when it’s necessary to probate an estate.

• Determine the Executor

When dealing with inherited properties involving a will, identifying the estate’s executor is typically straightforward. A crucial aspect of a will is appointing an executor capable of fulfilling the deceased individual’s intentions during the probate process. Assets specified in a will cannot be liquidated until the will receives validation from the Court. Once sanctioned, the designated executor gains the authority to execute the deceased’s wishes. However, if the will faces a legal challenge or if no will exists, the process may be prolonged as the Court intervenes.

The probate court will appoint someone not associated with the family as an administrator to the estate. These administrators play a similar role as an executor; they are responsible for carrying out the wishes of the deceased as stated in the will, as well as paying off any of the estate’s debts and distributing any assets. They may also determine if any real estate assets will need to be sold to pay off the estate’s debts, including back taxes, mortgages, etc.

• Working with Lawyers and Real Estate Agents

Probate can be a complex process, which is why it’s crucial to have an experienced lawyer by your side to navigate the potential challenges of selling an inherited home. Once you receive approval from the probate court to proceed with the property sale, the next wise move is to collaborate with a real estate agent familiar with inherited homes. A knowledgeable agent with probate experience will be well-versed in the intricacies and regulations of such sales. They can assist you in finding the right buyer to maximize the value of the inherited property. Additionally, they can provide valuable insights on where to invest in renovations and upgrades wisely, distinguishing between worthwhile improvements and unnecessary expenses. Following their guidance could make the difference between a swift, profitable sale and being left with a property that lingers on the market and sells below its potential value. Mass Bar Association has one of the largest lawyer referral service in the nation. Great resource to help you solve your legal questions. Additionally, a list of Fast Real Estate Experts in your area.

• Resolve Any Debts

When you think about “inheritance,” are you envisioning a distant relative surprising you with a million-dollar mansion in the serene woods, or are you faced with the practical challenges of managing a property entangled with liens, overdue taxes, and a burdensome mortgage that could diminish your profits upon sale? Unfortunately, the passing of a loved one often entails handling their financial obligations, whether in the form of outstanding taxes, an existing mortgage, or unpaid debts. Prior to benefiting from any inherited assets, settling these debts is paramount. While inheriting a house may appear advantageous, it could also become a significant financial burden. Seeking guidance from a knowledgeable estate advisor is crucial for exploring viable solutions in estate management. If the property is paid off, a quick search can be done on your town or city website, where oftentimes the tax and water billing information is posted (you might need the account number). If the property has not been occupied for some time, make sure to visit the town hall and ask the collectors, water, and health departments for records. Additionally, order a Municipal Lien Certificate. An attorney helping you in the process could facilitate this part.

• Clean & Restore the Home

Once ownership has been decided and the property is considered yours, your next step will be to determine whether you want to reside in it, lease it out, or sell it. In many cases, inheriting a property involves dealing with a home that may require significant maintenance and repair. Whether the property has been neglected for years, requiring extensive cleaning and renovation, or if it has not seen any modern upgrades and needs a complete overhaul to become marketable, these are essential considerations often overlooked when inheriting real estate. An experienced agent could help you navigate this part and offer you an “As Is” and an “After Repair Value” evaluation. Here is a link to 10 Home Renovations That Offer the Best (and Worst) Return on Investment

Do all heirs have to agree to sell the property?

When it comes to selling an inherited house or property, the need for agreement among heirs depends on the establishment of ownership. If ownership is confirmed through a will or probate court, no consensus is required. However, in cases where ownership is not determined, such as in estates without a will or with a Court-appointed administrator, all heirs must agree to the sale. This applies even to properties auctioned by the Court to settle estate debts. In situations where a buyer acquires a house through auction, but some heirs dispute the sale, the purchase is halted until a resolution is achieved through mutual agreement.

• How to Settle a Disagreement

When Heirs in Massachusetts are at odds over an estate, it’s crucial to establish an executor. This key individual ensures the deceased’s wishes, as outlined in the will, are honored, minimizing conflicts over asset distribution. In cases where the absence of an executor leads to will disputes, engaging a mediator might be the next recourse. Opting for a neutral intermediary can prove more cost-effective than resorting to legal proceedings in probate court. You can find a mediator at the Massachusetts Council on Family Mediation.

• Best Practices

But what if the issue is around the executor themselves? Disputes can occur when a family member is named as the executor or trustee of a will, causing strife with the other family members. If this has happened to you, an option is for the person to decline the appointment and choose an independent fiduciary, such as an estate-planning attorney, to administer the will. Stepping back while a neutral party steps in might not just keep arguments from cropping up, but might also give everyone the time and space to deal with difficult emotions before it permanently damages your family. 

How is inherited property taxed when sold?

Did you know that in 2020, state and local governments in the United States raked in over $5.3 billion from estate and inheritance taxes? Yes, that’s a hefty sum! However, navigating the complex web of laws and regulations that vary from state to state can be daunting. It’s advisable to conduct thorough research and seek guidance from a seasoned lawyer well-versed in taxes and estate planning. This is especially crucial when handling an unexpected inheritance or drafting your last will and testament.
Here is how the IRS answers this question.

State Tax Laws

Real estate laws vary by state, especially when it comes to inheritances. When selling an inherited property in Massachussetts, you may encounter different taxes, including estate tax, inheritance tax, and capital gains tax on your inheritance. It’s important to understand the tax implications in your specific state. Notably, twelve states impose an estate tax, 5 have an inheritance tax, and one state levies both estate and inheritance taxes. Here is the Massachusetts Estate Tax Guide and remember to check with you CPA. The Massachusetts Society of Certified Public Accountants (MassCPAs) has additional resources and CPA Directory.

1. Capital Gains Tax on Inherited Property

What is the capital gains tax and which states require it? The capital gains tax is paid on the appreciation of any assets that an heir inherits through an estate but it is only levied once the asset is sold for a profit, not when you inherit. This tax is then paid on the difference between the sale price and the purchase price of the property. Most states require this tax paid on an inherited property, but there may be exemptions for individuals selling a property for less than a certain amount. An example is Washington State, where the capital gains tax is not levied on homes and/or properties sold for less than $250,000. There may also be other legal ways to get around or reduce the capital gains tax in your state, including reinvesting the money in another property. Consult with a tax lawyer knowledgeable of the laws in the area you will be selling before proceeding with the sale of your property.

2. Estate Taxes

An estate tax is a tax paid directly out of the estate to the state before anyone is able to inherit it. Worried that you might get a huge hit taken from the estate? Don’t worry! The estate tax has a minimum threshold which in 2023 was $12.92 million for individuals. This means that the government is not able to charge you an estate tax unless your total taxable estate is worth $12,920,001. The remainder is passed on estate tax-free. Despite having such a high threshold, each year more states repeal their estate tax laws, losing out on millions of dollars of revenue.

3. Inheritance Taxes

Only six states have an inheritance tax, meaning that it is likely that you are in the lucky majority that won’t have to deal with this. But if you live in one of those six states – Maryland, Nebraska, Kentucky, New Jersey, Pennsylvania, and Iowa – you as a beneficiary/Heir to an estate will be required to pay taxes on your inherited assets and properties. But don’t worry – even if you live in a state that has an inheritance tax, you won’t have to pay a dime if the deceased lived in one of the 44 states that does not have this tax.

Documents required to sell an inherited property

To list a property for sale and demonstrate legal ownership, you must possess court-issued documents granting you the authority to act as the estate’s executor or administrator. These documents validate your capacity to oversee the inherited property. When a buyer is secured and you are prepared for the closing process, it is crucial to have the deed, title insurance, or any pertinent legal records to confirm your legal ownership of the inherited property. 

Before selling an inherited property in Massachusetts, Massachussetts, make sure to conduct thorough research on the required additional documents. Certain jurisdictions may necessitate property-related paperwork such as previous surveys, inspections, or other relevant documentation related to the property’s condition or history.

Is there an easier way to sell?

Indeed, there is a solution in Massachusetts for selling your inherited property without hassle. At Ephesus LLC , we specialize in purchasing inherited houses for cash, offering a seamless transaction process with minimal fees. Reach out to us today to receive a competitive cash offer for your inherited house, condo, or property. Regardless of the condition, we are prepared to buy your home. Additionally, we provide expert assistance in navigating the complex probate home selling procedure. Trust us to simplify your home selling journey and allow you to transition smoothly to the next chapter of your life.

If you are a property owner dealing with a home stuck in probate in Massachusetts, Massachussetts [market_zip] that you’re looking to sell, contact Ephesus LLC at (617) 340-6527 at any time for a competitive cash offer. We specialize in purchasing properties in any condition, regardless of the estate’s financial circumstances. Whether the property has been severely damaged in a recent storm or has been neglected for an extended period, requiring substantial upgrades to enhance its market appeal, we are here to help. Upon accepting our fair cash offer, our team of professionals will manage all necessary repairs, saving you the time and effort. Selling an inherited house has never been simpler with us.

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