There are some costs you will incur when selling an inherited house. They include the costs related to the listing, such as surveys, repairs, staging, and covering closing costs related to the mortgage.
If you are living in the Denver region and you are selling inherited property, there are some factors you have to consider to ensure you do not make mistakes.
They include the following:
Consult a Real Estate Attorney for a Legal Opinion
Before taking any action, it is advisable to seek legal advice. You need to find out the legal status of the house. It means confirming if the mortgage is fully paid or if there is any lien on the house.
Uniform Disposition of Community Property Rights at Death Act (UDCPRDA) was adopted by Colorado in 1973. The law states that when a married individual die, half of their marital property goes to the remaining spouse, and the other half is distributed as per the will.
If there is no will, the Colorado intestate succession law will be used to distribute the property. Another factor determining the distribution of the property is whether there are other remaining family members such as children, parents, or close relatives.
Therefore, if you intend to sell the house, you have to do according to the will. If no will exists, the probate court can grant you authority to sell the house and distribute the proceeds.
You Have a Right Not to Claim the House
You can decline to inherit a house if you do not want it. The mortgage payment amount on the house might be higher than the house’s value, which means it is better to let the house go into foreclosure.
You need to consult an attorney to help you fill out the paperwork necessary to disclaim the house.
No Need to Pay Inheritance Tax in Denver, Colorado
Unlike states such as Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania, in Denver, Colorado, you are not mandated to pay inheritance tax when you inherit a property.
There is a difference between inheritance tax and estate tax which the federal government collects. The federal estate tax has an exemption that starts at $ 5 million, meaning most estates don’t have to pay it.
Capital Gains Tax Liability on an Inherited House Can Be Avoided or Reduced
Capital gains tax liability is calculated on the difference between the buying and selling prices of the house. This figure can be huge, especially if the house was bought at a cheaper price long ago and has appreciated considerably.
However, when selling an inherited house, the rules are different. To calculate the capital gains tax, they no longer use the purchasing value but the appraised house value.
It means that if the house sells for a price less than the appraised value, you do not pay any capital gain tax.
Sell Your Inherited House for Cash
Before listing your house for sale, you must conduct a thorough inspection and determine if the house needs any repairs and how much those repairs will cost. You can then add 20 percent for any other unforeseen issue.
If you find out that the repairs needed are major and you do not have money to meet those costs, you can decide to sell the house to a real estate investor. The real estate investors are willing to buy the house as-is and pay cash. This will make your work easier and faster.
Property inherited from someone deceased can later be sold and turned into money by the beneficiaries of the inheritance.
Selling an inherited house may sometimes take longer to sell. Some expenses will be incurred during this period, such as paying taxes, utilities, and general maintenance.
Therefore, those who inherit properties should take time and consider the costs they will incur in carrying out the repairs before deciding what to do with the house.
In some cases, the beneficiaries named as new owners are more than one, and they need to decide on how to proceed with the management of the property.
The best time to sell an inherited house is when ownership claims have been sorted, and the transfer has been completed.
If the will has named more than one beneficiary and an agreement has been reached, the next step is to clear the house and list it for sale.
Special circumstances may require the property to be sold before officially going through probate. Such situations include properties where the owner had no will or properties that can not generate enough money to cover outstanding debts.