Selling an Inherited House: What You Need to Know

Selling an inherited house can be an emotional and financial decision. It may hold cherished memories, yet maintaining the property might not be feasible or practical. In many cases, selling can provide financial relief or allow for a fresh start with a more manageable living situation.

Losing a loved one is already difficult—figuring out what to do with their home adds another layer of complexity. If you’ve recently inherited a property, you may be asking: should I keep it, rent it out, or sell it?

Inheriting a House That Is Paid Off

An inherited house that’s already paid off can be a valuable asset—but also a responsibility. If you don’t plan to live in it, you’ll need to decide whether to rent, sell, or maintain it as a secondary property. Either way, you’re still responsible for property taxes, upkeep, and insurance.

There’s often emotional weight tied to inherited homes. You may feel a responsibility to preserve the house for family reasons, or conversely, you might feel ready to part with it. Selling the home could allow you to move on while honoring your loved one’s legacy.

Is There a Time Limit on Selling Inherited Property?

Generally, there is no strict time limit to sell inherited property. However, certain circumstances may introduce constraints. For example, homes located in historic districts may require permission from preservation authorities prior to selling or making changes.

If the home was used as collateral for a loan, lenders might impose a deadline for sale or transfer. If you’re uncertain, it’s wise to consult a real estate attorney to understand any deadlines that may apply in your state or situation.

Can You Sell an Inherited Property Before Probate?

In most cases, inherited real estate must pass through probate before it can be sold. However, there are exceptions. If the property was held in a living trust or jointly owned with survivorship rights, probate may not be necessary.

Some states also allow certain small estates to bypass probate. To avoid legal complications, consult an estate attorney or probate expert to determine the specific requirements in your jurisdiction. If probate isn’t required, you may be able to sell the home more quickly than expected. Read more about selling a house in probate.

Selling Inherited Property in California

If you’ve inherited a property in California, here are some steps to help you navigate the process:

Get organized: Gather essential documents such as the deed, mortgage information, and the death certificate.
Understand state laws: California’s laws regarding inherited property sales vary—consult an attorney to confirm whether probate is necessary.
Order an appraisal: A licensed appraiser can provide a fair market value of the home to help you price it appropriately.
Set a realistic price: Account for any repairs, renovations, or debts owed on the property when pricing.
Prepare for showings: Be ready to answer buyer questions about the home’s condition and history.
Finalize the sale: After finding a buyer, sign a purchase agreement and proceed to closing. Learn more about selling tenant-occupied properties.

Documents Required for Selling Inherited Property

To sell an inherited home, you’ll typically need the following documents:

The property deed
Death certificate of the previous owner
Last will and testament, if available
Probate court documents (if applicable)
Real estate appraisal report
Signed purchase agreement

While not mandatory, hiring a real estate attorney to review contracts and ensure compliance is highly recommended.

How Is Inherited Property Taxed When Sold?

Capital gains taxes may apply when you sell inherited property. However, the IRS uses a “stepped-up basis” which resets the home’s value to its fair market value on the date of the previous owner’s death. This minimizes taxable gains if sold shortly thereafter.

For example, if the property was worth $100,000 when inherited and sells for $150,000, the $50,000 gain is taxable. Always consult a tax professional for accurate guidance.

How to Report the Sale of Inherited Property on Your Tax Return

You must report the sale of inherited property on your federal tax return using Form 1040 and Schedule D. This form helps you calculate the capital gains or losses and includes any selling costs, such as agent commissions.

If you’re unsure how to file correctly, it’s best to speak with a CPA or tax advisor to avoid penalties or missed deductions.

Sell Your Inherited House Fast

If you need to sell an inherited home quickly, Friendly Offer is here to help. We’re a family-owned company that specializes in buying inherited properties for cash—no repairs, commissions, or delays required.

We can close in as little as 7 to 28 days and handle the entire process so you can move forward with peace of mind. Our offers are fair and based on market value, and there are no hidden fees or last-minute surprises.

Call us at (805) 422-7049 or visit Friendly Offer to get started. You can also fill out the form below to receive your no-obligation cash offer today.

Originally Published: October 11, 2022