Selling an Inherited Home: What You Need to Know

Quick Answer:
You can sell an inherited house once the person with authority is in place: the executor during probate, the trustee for a trust, or the heirs themselves once the title is in their names. Before cleaning out or making repairs, find out what the home is worth as it stands. Heirs usually receive a stepped up tax basis, which often means little or no capital gains tax when the house sells soon after it is inherited.

Selling an inherited home can be different from selling a home you have lived in yourself. You may be dealing with a property you don’t know well, belongings that need to be sorted, repairs that have been put off, or decisions involving several people.

Before you start cleaning everything out or spending money on the property, it helps to understand what you have and what it may be worth.

I’m Jolene Baijot, a Designated Broker and Certified Probate Real Estate Specialist (CPRES) with more than 25 years of real estate experience. I like to walk through the home before recommending changes. It helps us make a plan that fits the property, your budget and your timing.

Start by Understanding the Property

Every inherited property is different.

Some homes are ready to sell with very little preparation. Others may need repairs, cleanout, maintenance, or a different selling strategy altogether.

The property itself should help guide those decisions. Its condition, location, features, and current market all matter.

That’s why I prefer to see the property before someone starts making major changes or spending money getting it ready to sell.

Do You Need to Clean Everything Out First?

Not necessarily.

You may eventually need to remove belongings and prepare the home for the market, but you don’t have to finish all of that before talking with a real estate agent.

Seeing the property in its current condition can help determine what actually needs to be done and what may not be necessary.

Should You Make Repairs Before Selling?

This depends on the property.

Some repairs may improve the way a home shows or increase its appeal to buyers. Other projects may cost more than they add to the eventual sale.

Before making repairs or improvements, it makes sense to understand the property’s condition, likely buyer, and current market.

Related: Should You Make Repairs Before Selling an Inherited Home?

Should You Sell the Home As Is?

Selling an inherited home as is can make sense in some situations, while other properties may benefit from some preparation before going on the market.

There isn’t one answer that works for every home.

The goal is to understand your options before deciding how much time and money you want to put into the property.

Related: Should You Sell an Inherited Home As Is?

What Is the Inherited Home Worth?

Knowing the property’s current market value is an important part of deciding what to do next.

The home’s condition, location, recent sales and current competition all affect its value. Unique homes, waterfront properties, acreage, and investment properties may require additional analysis.

Related: How Do You Determine the Value of an Inherited Home?

What If You Don’t Live Near the Property?

You don’t necessarily need to live nearby to sell an inherited home.

Much of the sale can be handled remotely. I can be your local contact, coordinate preparation and keep you updated along the way.

Related: Selling an Inherited Home From Out of State

Your Options: Keep, Rent or Sell

Most families choose one of three paths.

Keep it. Some heirs move in or keep the house as a family place. If several people inherited it, the one keeping it usually buys out the others.

Rent it. Renting can work well for a home in good condition in a strong rental area. It also means being a landlord, or paying a property manager.

Sell it. Selling is often the simplest way to settle an estate and share the value fairly among several heirs.

Knowing the home’s value and condition makes this choice much clearer.

Selling Inherited Property With Multiple Owners

When several people inherit a house, everyone needs to be on the same page about the sale.

During probate, the executor usually has authority to sell. In a trust, the trustee does. Once the heirs own the house together, every owner signs.

If one heir wants to keep it, a buyout at a fair price is often the answer. See do all heirs have to agree to sell for the details.

Taxes When You Sell an Inherited Home

Inherited property usually receives a stepped up basis. The home’s value on the date of death becomes your starting point for capital gains tax.

So if the house was worth $500,000 when your parent passed and you sell it for $510,000, the taxable gain is generally based on that $10,000 difference, not on what your parent paid decades ago.

A date of death appraisal documents that value. Your CPA can confirm how it applies to your situation.

What Happens to the Mortgage?

If there’s still a mortgage on the house, the loan doesn’t disappear, and it doesn’t have to be paid off right away.

Federal law generally lets a relative who inherits a home keep the existing mortgage in place, so the lender can’t call the loan due just because the owner passed away. Heirs can keep making payments, take over the loan, or pay it off when the house sells.

A reverse mortgage may become due after the last borrower passes away, although protections can apply for an eligible surviving spouse. Heirs can pay it off, refinance or sell. On the most common type, an FHA insured reverse mortgage, heirs who sell generally won’t owe more than 95% of the home’s appraised value. Reach out to the loan servicer early, since there are timelines to follow.

Know Who Can Make Decisions About the Property

Before listing an inherited property, make sure you know who has the authority to make decisions about the real estate.

If there are questions involving probate, ownership, an estate, or authority to sell, those should be discussed with the appropriate attorney. Tax questions should be handled by a qualified tax professional.

My role is the real estate: evaluating the property, preparing it for the market, pricing, marketing, negotiating offers, and managing the transaction through closing.

If the house is going through probate, see my guide to selling a house in probate. If it’s held in a trust, see selling a house in a trust.

Start With the Property

You don’t need to have everything figured out before talking with a real estate agent.

Before you empty the house, start making repairs, or decide to sell it as is, find out what you have and what it may be worth in its current condition.

Start with the property. The rest of the plan can come from there.

Frequently Asked Questions

How soon can I sell an inherited house?

As soon as the person with authority to sell is in place. That’s when the court appoints the executor, when the successor trustee steps in, or once the title is in the heirs’ names.

Do I pay taxes when I sell an inherited house?

Often very little. Thanks to the stepped up basis, a sale soon after inheriting usually has a small taxable gain, if any. Your CPA can confirm the numbers.

Can I sell an inherited house with a mortgage?

Yes. The mortgage is paid off from the sale proceeds at closing, just like any other sale.

Should I sell an inherited house or rent it out?

It depends on the home, the rental market and how hands on you want to be. I’m happy to walk through the numbers on both with you.

If you would like to keep reading, I also cover what a probate listing is and designer tips for preparing an inherited home.

About the Author

Jolene Baijot is a real estate agent and Designated Broker with more than 25 years of experience and over 1,000 transactions. She holds the Certified Probate Real Estate Specialist (CPRES) and Accredited Buyer’s Representative (ABR) designations. Having grown up in a family of interior designers, Jolene brings a designer’s eye to preparing inherited homes for sale. Learn more about how Jolene helps with probate and trust sales.

If you’re thinking about what to do with an inherited home, I’m happy to listen and help you explore the options. Reach out whenever you’re ready.

This post is general real estate information. An estate attorney and CPA can advise you on authority to sell and taxes for your situation.