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An inheritance is meant to be a blessing on the loved ones that someone leaves behind, but sometimes that blessing can turn out to be overwhelming and frustrating. If you’ve made the sometimes difficult decision to sell inherited property in Charlotte, you’ll want to know what potential pitfalls to avoid.
A different kind of home selling process
Selling inherited property isn’t quite like typically home selling. There are specific things surrounding this kind of home sale that are unlike traditional property transactions. Right now, what you need is expert advice about what the common mistakes that people make are and how to avoid them.
The biggest pitfalls that people in North Carolina selling an inherited home tend to find themselves tumbling involve:
- inheritance tax
- lack of family support
- ignorance of the legal process
- home inspection
- leaving the house as-is
These are some broad categories that most of the biggest issues fall directly into. Homeowners navigating the North Carolina probate process when inheriting property from family members will run into lots of other hiccups along the way, but these are the big buckets that most of the issues fall into.
Don’t leave cash on the table
It’s not all about the money, but in certain circumstances, it is about making sure that inherited property is giving those who are left behind the most possible benefit. A loved one has left that property to you for a reason if there was a will. If there wasn’t a will, then the property is a legacy for someone who’s gone. It’s perfectly ethical for you to take responsibility for inherited property and try to get the most out of its sale.
Here are five costly mistakes that are made all too often by loved ones selling inherited property, plus real world tips on how to preserve the value of that property throughout the process.
1 – Trying to avoid inheritance tax
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There are two things that everyone has to deal with at some point in their lives, and taxes are one of them. Inheritance taxes are baked into North Carolina law, and it’s no use in trying to get around them.
Before you even get there, keep in mind that assets held by the estate will need to cover outstanding debts left before the new owner takes hold. This is one place where probate will come into the picture.
No matter whether the property comes from a will that’s laid out exactly who gets what or if the property has come to you through a Mecklenburg County probate court, if you have inherited a property, you’re going to owe inheritance tax on it in North Carolina.
If you’re unsure about whether you owe inheritance taxes on something you’ve been left by a loved one, speak to a real estate attorney in Charlotte, NC. In North Carolina, those taxes are levied the moment someone passes away. This means that interest and fees start accruing, even if you are not initially aware of your ownership of the property.
For federal estate tax, there’s something called the legacy tax exemption. For property that’s valued under twelve million dollars, there’s no federal inheritance tax. That’s the current number, but it goes up every year to compensate for inflation.
Capital gains taxes are the amount of money that you owe the federal government on an inherited house. On the federal level, capital gains tax is done on a stepped up basis. This means that the capital gains taxes don’t start accruing until the moment you inherit the property. That’s when the clock starts ticking, not when your love is done buying the house.
Capital gains taxes will vary widely depending on the fair market value of the property. In North Carolina, state capital gains taxes are folded into income and taxed at the same rate. They’ll go into the tax filer’s personal income when it comes time to pay taxes the year following when you inherit property.
The other issue to contend with is property taxes. Property taxes are levied by the local government in Charlotte, NC and in Mecklenburg County. These tax implications don’t come in the form of taxable income as they do on the state level, or in capital gains tax as they do on the federal level as they are assessed yearly. You have to pay taxes on the fair market value of the home to the municipality that it’s located in. If you aren’t in Charlotte proper, you might owe those taxes to the city of Matthews, Gastonia, Indian Trail, etc.
It’s always worthwhile to consult with a real estate accountant to make sure you’re doing your taxes properly in regards to an inherited house. There could be a home sale tax exclusion that you aren’t aware of, or some tax liability that you need to find out about. Tax law is complicated. Unless you’re a certified tax professional, you wouldn’t know all of the ins and outs about how to pay tax on an inherited house.
Every moment that you put off trying to take care of North Carolina tax implications on your Charlotte, NC home is one that you’ll accrue interest and fees. There is no way around this tax from the state or from the federal government, so it’s much better to go ahead and address it as soon as you can. There’s no use trying to avoid paying taxes. You could find yourself in default if you owe money to the state of North Carolina, and no one wants to deal with that.
2- Trying to do it all on your own
Losing someone is hard on us. Most often, if you inherit a home, you’re inheriting it from someone you were close to. Even if you inherited a house from a distant relative, there could be conflicting feelings or family drama surrounding it. Sometimes people need to sell an inherited house that was left after losing a spouse, in which case children or grandchildren can come forward with claims on the property.
All the way around, selling an inherited property is generally complex.
If there is more than one heir, then multiple people will have their own ideas about how to sell the property. One person might have the property as their primary residence, which could force the rest of the family members to have to figure out what to do with the piece of real estate while still gaining their inheritance.
Even without a purchase price, those inheriting the property will have to pay capital gains tax on the amount it’s worth. If a family member doesn’t want to sell and there’s money owed to the federal government, that’s stressful on everyone involved.
If there are joint heirs on an inherited property, speak to a financial advisor. Other assets such as personal belongings will require a different kind of support to get through, but something as significant as a house will be subject to lots of people wanting a piece of the property.
You don’t have to do it on your own. Getting support from either professionals in the home selling field for the sale, or emotional support in the form of a therapy group or counseling will help you to not feel overwhelmed. There are a few options available to you, and it’s well worth the investment up front to preserve your peace of mind.
You can’t make smart decisions about selling an inherited house if you’re not in a good headspace about it.
3 – Forgoing legal counsel
Before you make any move towards selling an inherited property in Charlotte, be sure to find an attorney who knows what they’re doing in the case of inherited property. Even if the will is straightforward, you want to have the whole process investigated to make sure that you know what’s what.
It’s unlikely, but possible, that someone would have a second will stashed away somewhere. The last thing you need is to find out that someone else has a significant claim to the property you’re trying to sell.
Depending on the conditions of your inheritance in North Carolina, you may have to make sure that all taxes are paid before you sell a home. Inherited property in North Carolina is governed by different laws than traditional property sales. You might even need to get a letter from the court stating that you have the legal right to sell the property.
Inherited properties in North Carolina are subject to the probate process if there’s no will. This means that the deceased relative didn’t leave a clear direction for the real estate to go in after they were gone, so the courts have to decide. In Charlotte, that means working with the Mecklenburg County court system.
The probate process inheriting property regulations are there to make sure that property goes in the right direction. If a property was put into a living trust, has a second person’s name on the deed like a spouse, or who had named beneficiaries outside of a will can usually avoid probate in North Carolina. The legal probate process usually takes less than a year in Charlotte.
Having a clear inheritor simplifies matters considerably, but inherited properties are always subject to local, state, and federal statutes when they change hands. All of the legal side has to be figured out before you can even consider trying to get fair market value for the inherited home.
Whether you think that your piece of inherited property is clearly willed to you or even if your name was on the deed of the Charlotte, NC home, you want to contact legal counsel to be certain before you take any steps to list the house or sell the property.
4 – Skipping the home inspection
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Even if a home was well kept by the person who you’re inheriting the house from in Charlotte, that doesn’t mean that there aren’t unseen things hiding behind the walls. Even when a homeowner has had consistent use of the house prior to a sale, home inspections commonly uncover issues that they weren’t even aware of.
If you’ve decided on selling inherited property, or if you’re just exploring the idea of selling inherited property, getting a home inspection will help you to get through the process much more easily.
North Carolina real estate law requires that owners disclose problems to potential buyers. If you’re not aware of the existing issues, then it’s not possible to let potential buyers know that they exist. Though you aren’t technically liable for home repair issues like termites, foundation cracks, structural problems, electrical issues, etc. that you aren’t aware of, it’s much better to know about existing problems than to attempt to convince potential buyers that you were ignorant.
It’s a smart idea to do this before putting the home on the market. From here, you can decide to do the repairs yourself or to leave them for the next owner.
A home inspector is a fantastic resource for information about what repairs will be needed and how much they might cost. While this won’t be an official estimate, it will give you a clear idea of what’s going to be done and how large the scope might be. Though it’s not a free evaluation, it’s something that your real estate agent can use to sell property for the best price.
An inspection is especially important if there was a single homeowner for a long period of time. If there is no recent sale on the books, then there hasn’t been a thorough inspection of the home in a long time. Hidden problems can develop shockingly quickly and easily. Other improvements might have also covered up festering issues with the home.
Sellers who don’t commit to a home inspection are a major red flag for potential homebuyers. In previous housing markets, almost all buyers required a home inspection – more than ninety percent. In today’s market, things are decidedly different. It’s such a seller’s market in recent years that many buyers are willing to forego a home inspection. That doesn’t mean you shouldn’t do one. A home inspection can help to increase the price point on a home.
5 – Leaving the home as is
It can be tempting to try to sell an inherited home as-is because you’re so emotionally exhausted from the death of your loved one. Often, it’s a good idea from a mental health standpoint to sell a house fast.
You won’t necessarily get the best possible price for a house if you sell it as-is for fast cash. Puting the time and effort into the house can really raise the price.
You don’t have to do this all yourself. Hiring a professional home stager, a professional cleaner, and even yard and home maintenance providers can make a huge difference in how much of a mental and physical load it leaves on you.
A house in excellent condition is always going to command more money than a home that’s in disrepair. Even if you don’t want to do extensive maintenance on the home before you sell an inherited home, you can do the basics of cleaning and refreshing. Whether it’s amending the curb appeal or putting a fresh coat of paint on the home, you’ll command a higher price with a well-staged house.
Don’t be afraid to declutter relentlessly in this situation. Ask family and friends to help you with an inherited home to get rid of whatever excess things might be hanging around the house. It’s so worth it to get this taken care of early, rather than putting off purging your loved one’s things.
If you’re really at a loss about what to do with items, offer them to friends and family, then put everything else out on the curb with a sign that says “free” and watch it disappear.
Takeaways about selling inherited property
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The process of selling an inherited home is a double edged sword. In some ways, it’s easier to deal with selling inherited property because there is a clearly delineated set of practical steps to take. The hard part is finding the clear headspace to take those steps in the wake of losing a loved one.
Whether the loss of a loved one who left your property was sudden, or whether it was long expected, the choice to sell inherited property can be difficult. Working with a real estate agent or a law firm in Charlotte, NC to support you can make a big difference. There’s always the option to go for a quick sale, but unless you’re the sole owner, that can be a real challenge. No matter the property value, there are lots of reasons to take your time and make a smart decision.
With these guidelines for putting an inherited house on the market, you can find your way through to getting the closure you need while preserving the financial legacy left to you in this inherited home.