Can I Sell My Inherited Property in Winston-Salem?
Inheriting a property does not happen every day. In fact, such an inheritance might seem like a dream come true. If you are interested in selling the inherited property in the Winston-Salem area, you of course are wondering if you can sell it. The short answer is "yes", but the legal and financial responsibilities make selling an inherited home quite challenging. Each county in North Carolina is a little different, and Forsyth County has its own probate processes for estates. This is compounded by the fact that most people have no previous knowledge or experience with selling an inherited property. Of course, having a certified probate expert on your side definitely
helps. The bottom line is the inherited property cannot be sold until ownership has conveyed to the heirs during the probate process. However, it is still vital that you are aware of the potential intricacies, benefits, tax consequences, and pitfalls that make up the process of selling an inherited home. Read on to find out more.
What types of property can be inherited?
You can inherit anything from vehicles to patents. The scope of inheritance and the division between family members is most frequently outlined in the estate plan. However, you can also inherit money, land, checking and savings accounts, stocks and bonds, intellectual property, and personal property. We'll focus on the inherited real estate, given that it is subject to the greatest number of legal obligations and regulations.
What to keep in mind before selling an inherited home in Winston-Salem?
For most people, one of the problematic aspects of selling inherited property in Winston-Salem lies in the fact that the property must pass through probate before the property can be sold. This is not the case to the property is in a living trust or is held in a self-directed IRA with a beneficiary. Additionally, there are a variety of taxes that the sale is subject to. This alone makes the whole selling process far from straightforward. Thus, there are a number of considerations you need to take into account. It is always recommended that you speak with a qualified estate attorney or an experienced tax consultant who is familiar with inherited properties and the probate process in North Carolina. A Certified Probate Expert can be your quarterback and direct you through the probate process.
What are your options with an inherited home in Winston-Salem, NC?
There are a few options for inherited homes in the Winston-Salem Forsyth County area.
- If you are the sole heir, you could choose to live in the home, or if there are multiple heirs, you could buy out the other heirs and live in the home. Making the inherited home the heir's primary residence would also save the heir of paying capital gains tax. Capital gains tax is not required federally or in North Carolina when you sell your primary residence.
- If you are interested in selling the home, and the property is in average to above average condition, you can list the property with licensed Realtors and sell to retail buyers. This option will probably net you the highest return.
- Sell the inherited home at auction. Some heirs may choose to sell their inherited property at auction. Typically, that is better for personal property more so than real estate. Most auctions aren't as highly advertised, so the heirs have to rely on the auctioneer to advertise. If the auction is not advertised heavily, it may draw a low crowd and therefore, a lower price. Further, auctions normally pull a different type of buyer and the buyer is required to pay a "buyer's premium".
- Many inherited homes are not in great condition or have a number of issues. For one, the property may be in need of a lot of repairs with overgrown landscaping. Or the heir(s) live out of state. Or the home may have a mortgage, and payments are late, or there isn't much equity...or even worse, under water. Additionally, the property could be full of unwanted items from the decedent. In these instances, you may want to unload the inherited house quickly to relieve the stress. If you want to sell the home quickly and as-is, you might sell to an investor with a cash offer. Typically, cash offers will close more quickly than traditionally financed properties, and the investor may cover everything including any necessary cleanout and the seller's closing costs.
- Heirs also have the option of repairing the home and then selling it, but most heirs would prefer to sell the property as-is.
Hence, all the advice and guidance you can get from your agents will be more than worthwhile.
Settling the ownership of the inherited home
Furthermore, the selling process may be even more challenging if you are not the sole owner of the property. Most of the time, the ownership of the inherited property is divided among two or more relatives of the deceased. So, you might have to share the responsibilities and, finally, the earnings from the sale with your siblings or other relatives. In that sense, good and transparent communication is a must if you want to make the initial decision-making process easier.
When can I sell the inherited property?
You can sell the property only if the inheritance has been definitely divided in the probate proceedings. So, all the parties included in the will have to consent to the selling process. Also, note that you also have to maintain the house over the course of the probate and selling process. So, you will have to take into account the expenses going towards utilities and property taxes until the ownership has changed hands.
Once every heir to the inherited home agrees to proceed with the sale, you are able to clean out the property and start the selling process. If the beneficiaries agree to split the earnings, not just of the home itself, but also all the personal property such as cars, furniture, jewelry, artwork, and the like, you can sell it off at an estate auction.
Of course, in a situation when you want to wrap up the sale as soon as possible, having a professional to guide you through the process is invaluable. Basically, even though you might be selling under a time constraint, this does not mean you need to settle for a subpar offer.
In that sense, having a hybrid agent investor brings you a number of selling advantages. Namely, you can list the inherited property on the local MLS or get a competitive cash offer from the agent-investor. In this scenario, you have a safety net that will allow you to sell the inherited home for a reasonable price even when you do not have the time to for other traditional property selling schemes.
However when it comes to personal property in the estate, you have to wait for the probate proceedings to decide what belongs to each beneficiary. In the mean time, storing the so-called “unproductive” property (i.e., personal property) in a safe storage unit can help reduce the property maintenance costs. Furthermore, the decision to rent a storage unit also helps keep your possessions safe, especially in cases when you are not in a position to visit the inherited home on a regular basis. Knowing how to protect items in storage will greatly help you in the long run.
Can one of the beneficiaries enforce the sale of the inherited home?
The only way your sibling or any other beneficiary can legally force the sale of the home is in situations when the ownership is divided. So, when more people hold the rights to the property and the majority of them want to sell, the selling process can be enforced through a probate action. Another option you have at your disposal is to buy off the shares of other beneficiaries.
Another scenario that may happen involves selling to cover the expenses of closing the Estate. So, if your grandparents have any outstanding debt or you cannot reach a satisfactory agreement with your relatives, you can file a partition action with the Forsyth County probate court or other North Carolina county court and initiate the sale of the inherited home.
If the Forsyth County probate court approves the partition action, the inherited property will be appraised and listed for sale. Once the sale is closed, the funds will then be split among the beneficiaries, even in cases when one of them is against the sale. This scenario would be similar in other North Carolina counties.
What taxes have to be paid when selling an inherited home
Selling an inherited home is subject to taxes because the IRS observes it as an investment gain. So, you have to pay the capital gains tax when you sell the house. The good news is that it applies only to the difference between the initial value of the property and the final selling price. Note that you may also have to pay more if you have a higher income. Furthermore, the capital gains tax will be determined based on the time period in which you owned the home. So, if you sell the home within one year after the probate proceedings, you are due to pay off the short-term tax rate, which ranges anywhere from 10-37%. If you were in ownership for over a year, the long-term capital gains tax is applied (0-20%).
In order to avoid paying the capital gains tax, you could consider making the inherited home your primary residence. If you rent out the property, you also have to pay income taxes after selling an inherited home. So, the rental income you have acquired over the period is also subject to taxes.
Should I get an appraisal on my inherited home?
Knowing the value of an inherited property is very important for an heir. It is also required when listing the inventory of the estate in Forsyth County and other North Carolina counties. As the previous section mentioned, the heir will have to pay capital gains tax for the tax year the property is sold. Estates are easy targets for the IRS, so it is highly recommended to get an appraisal based on the decedent's date of death. Getting an appraisal will give the heirs a stepped up in basis for future tax purposes when the inherited home is sold.
For example, the decedent paid $100,000 for the property in 1990, but passed away in 2022. At the date of death, the appraiser estimated the value to be $250,000. The heir sells the property a year after their loved one passed away for $275,000. The heir will have to pay capital gains tax based on the $250,000 appraisal value or $25,000 capital gain.
Winston-Salem Inherited Homes come with a lot of responsibility for the Executor
Executors not only may inherit property, but they also inherit a lot of responsibility when a loved one dies. But with the right council, an inherited property in the Winston-Salem Forsyth County area can be sold. As you see there are several different options with different tax consequences. Having a Certified Probate Expert in your corner will help you make the right decisions and put you in touch with the right vendors to get you through the probate process in North Carolina.
Tony Green, one of the owners of Green Haven Realty, is an appraiser, Realtor and Certified Probate Expert (CPE). He is ready to help you through the Forsyth County probate maze. He can be reached by phone or text at 336.701.2891.
* NOTE: GREEN HAVEN REALTY OR THE AUTHOR OF THIS POST IS NOT A LICENSED ATTORNEY OR CPA. THIS POST SHOULD NOT BE CONSIDERED LEGAL OR TAX ADVICE. ALWAYS CONSULT AN ESTATE ATTORNEY OR TAX PROFESSIONAL WHEN SELLING INHERITED PROPERTY.