So, you’ve inherited property. For some, it can be a real boost to your portfolio. For others, it can be a highly stressful situation. Most people inherit lots of new emotions along with their property. This guide is a solid first step if you’re thinking of selling inherited property.
1| Ask yourself a few questions
If you can answer these questions, you’ll have a better idea of your selling situation.
How much is your property worth?
Is there an outstanding mortgage? If so, how much is it?
Are there other outstanding debts? (For example, property taxes)
Are there other people inheriting the property with you?
2| Read up on taxes
There are several tax implications of getting and selling an inherited property, several of which are specific to Wisconsin.
Inheritance tax: Though Wisconsin has no inheritance tax, you may owe if you inherit property in another state.
Gift tax: Wisconsin has no gift tax.
Tax basis: Let’s say your aunt bought a house in 1970 for $70,000. If it’s worth $200,000 now when you inherit it, you will be taxed at $200,000, not $70,000 (called a stepped-up tax basis).
Capital gains tax: As Nolo explains:
“A high tax basis is good. That’s because when someone sells an inherited asset, long-term capital gains tax will be due on the difference between the sales price and the tax basis. The higher the basis, the smaller the difference between it and the sales price.
For example, take that house, inherited by a son from his mother, with a date-of-death value of $200,000. If the son promptly sells it for $200,000, no tax will be owed, because he gets a stepped-up basis of $200,000. But if his tax basis had been the same as his mother’s, $75,000, then he would have owed capital gains tax on his gain of $125,000 on the same transaction. Currently, the tax rate is 15%.”
3| Prepare for sale
Let’s get into the nitty gritty.
Clean out personal belongings
This can be a very emotional process, so take your time and find help. Hold a garage or estate sale to speed up the process if needed.
Wait for the property to go through probate
The estate will need to go through probate, or the proving of the will, before you can sell it.
Find out who can handle the transaction legally
If the owner left a Will, the executor is the person who has the ability to distribute the assets of the estate, including real estate. If the property is in a Trust, the trustee holds this same power.
Pick a real estate agent
That’s where we come in. We are experienced with these kinds of sales in the Madison and Baraboo areas and can help take the stress out of your inheritance situation.
Please note that these are general guidelines and may vary based on your specific situation. Our real estate experts would be happy to look into it for you! Contact us now to take the first step toward selling your inherited property.