You've inherited a house. Congratulations. But you don't want to live in it, nor do you want to keep it as an investment property. So, instead, you've decided to sell it.

Selling a home is always complicated, but adding that it's inherited adds even more complexity to the equation. Everything from being bequeathed in a will to the presence of a mortgage can impact how you sell.

Circumstances of inheritance

How you came to own the home and the nature of your ownership, play prominent roles in selling it.

Dealing with probate

Probate is a legal process through which an estate's assets are used to pay its creditors, and the remainder is handed down to heirs according to the decedent's will or, if there is no will, state law.

Each state has a different process for probate, but it typically involves appointing an executor or personal representative for the decedent's estate. That person is responsible for following the terms of the will, managing the estate's assets, and seeing that they're appropriately distributed to the beneficiaries.

You must follow the entire probate process closely and not take possession of or sell the home before you're legally permitted. Of course, if you're also the executor of the estate, that simplifies matters.

The probate process can take months to complete. Once you've taken possession of the home or the estate executor has legally transferred it to you, you can begin to sell it.

I inherited the home with others.

Sometimes, you may inherit the home with other family members, such as siblings. If this happens, you become joint owners of the property and jointly responsible for making decisions about it.

Mixing family and money, especially when it comes to something as emotional as a childhood home, during an emotional time such as losing a loved one can be rife with stress. You must work with your family to ensure everyone is on the same page and prevent hurt feelings.

"If other heirs are involved in selling your inherited home — such as siblings or cousins — you may want to consult an attorney about the best way to handle these relationships and responsibilities during this process." "You may also want to discuss whether or not they will be contributing financially toward any repairs or renovations required before selling the property."

Another option, especially if no one is interested in living in the property, is to buy out the other heirs. You can offer to pay them for their equity interest so that you become the property's sole owner, which can simplify the future sale.

I'm a joint owner of the home.

If you and the decedent were both listed as owners on the property (as tenants in common or joint tenants with the right of survivorship), the process would be much more manageable. You would not have to worry about probate or other legal processes. Instead, you would become the complete homeowner and could proceed to sell it.

The financials of selling an inherited property

Whether the inherited home has a mortgage or is owned free and clear also impacts how selling it works.

Inherited homes with a mortgage

If the decedent was the sole person on the mortgage, the estate is responsible for continuing the loan payments. That means the estate executor must determine how to continue making mortgage payments from the estate's assets.

When you inherit the home through the probate process or otherwise, you will have to assume the mortgage and start making the monthly payments. Reach out to the lender to determine the logistics of assuming the mortgage and getting the property and loan under your name — an essential part of being able to dispose of it.

Once you've done that, you can sell the home.

Inherited homes without a mortgage

The process is more straightforward if the home has no mortgage: There is no need to worry about loan repayments. However, as the home's new owner, you must pay property taxes and utilities. Hopefully, the decedent's estate will have provided funds to cover these expenses, but if not, you're responsible.

As part of inheriting the home, you'll need to work with the local property records offices to put the deed to the house in your name and set up utility accounts. Once that's done, you can sell the home as usual.

Taxes and capital gains

Selling any property for a profit can trigger capital gains taxes. However, inherited properties have some unique rules.

When you sell the home, you must pay capital gains taxes on any profit. You calculate the profit by subtracting the cost basis for the house from the price you sold it at.

Typically, the cost basis for a property is the price paid to purchase it plus any substantial sums spent to improve it. However, when you inherit property, the cost basis is adjusted to be either the property's fair market value (FMV) on the date of the decedent's death or the FMV of the home on an alternate valuation date. The alternate works only if the executor filed an estate tax return and elected to use that valuation.

The sooner you can sell the home, the less time it will take for the house to gain (or lose) value. Quicker sales can mean paying less tax. Be sure to consult your tax advisor before making any final decisions.

Bankrate Insight

Two other taxes may apply to inheritances. The federal estate tax applies to estates valued above $12.06 million in 2022 and $12.92 million in 2023. The estate, rather than the heir, is responsible for paying these. However, depending on where the deceased lived and their relationship, beneficiaries may be subject to an inheritance tax in six states.

Finding a real estate agent to sell your inherited property.

As a seasoned real estate professional with over 30 years of experience, I, Robbyn Battles, have a wealth of knowledge in handling the sale of inherited properties. My expertise is not just confined to La Crescenta but spans across the greater Los Angeles area, including neighborhoods like La Canada, Sunland-Tujunga, Altadena, and Shadow Hills. In dealing with inherited properties, understanding the necessary disclosures and guiding sellers through them are critical parts of my role. Together, we will strategize to find the optimum selling approach, walking you through options such as selling your home as-is to minimize the need to invest funds in sprucing up the place. Considering each property's unique circumstances, I offer tailored suggestions to make the selling process smoother. My experience is particularly beneficial when communicating with multiple heirs, ensuring a cohesive and efficient transaction. One of my key focuses is setting up the first accepted offer for success, aiming to prevent the disappointment of a failed escrow. This approach is derived from my extensive experience and deep understanding of the market dynamics across various Los Angeles communities.