Did a parent pass and the family home was legally left to your care? While inheriting real estate can be exciting news because of value appreciation, some people aren’t very keen on inheriting properties. This is especially when that person is not anymore living in the house, not willing to spend for maintenance, or just don’t want to spend for property taxes.
If you’re one these people who want to get rid of their inherited home, don’t just abandon the property — sell it, turn a profit, and reap the benefits. Like most heirs who are planning to sell a property, we understand that your first question might be how much the house is worth, and how much can you sell it for, today. If you’re dealing with an inherited property, the pre-selling phase is quite different especially when estimating price. So in this article, we brush you through five (5) of the basic things to remember when setting a price for your inherited home in Norcross.
Tip#1: Know Your Home’s Fair Market Value At Time of Death
When a property is inherited, its base value becomes the fair market value (FMV) at the time of owner’s death. This means that if you sell the inherited home, the capital gains tax will not be based on how much it was bought by the deceased. Rather, the capital gains tax will be based on the fair market value upon death. So if you we’re going to sell the house within the same time as your loved one’s death, it’s possible that you won’t have to pay for capital gains tax. You only have to pay when you sell the house years after and the value has appreciated from the FMV at the time of death.
To give you a clearer example, supposing your loved one bought the property for $25,000 some 20 years ago; and t the time of his death, the fair market value of the home has already risen to $75,000. If you sell the house at $75,000, you won’t have to pay for capital gains tax. However, If you sell the house say 10 years after his death, and the FMV has risen more to $100,000, your capital gains tax will be calculated from the difference between $100,000 and $75,000 (not $25,000).
Tip#2: Work With a Licensed Real Estate Appraiser
In any real estate sale, an official appraisal report can only be produced and certified by a licensed real estate appraiser. If your real estate agent is also a licensed appraiser, you can avail of his/her appraisal services, but this is seldom advised because you’d want to avoid bias.
Personal finance expert Bank Rate estimated that the appraisal cost of a single-family home is about $300-$450. Prices are higher in central districts, in areas that lack comps, bigger-sized homes, and houses that have very intricate architecture. If a home is also in really bad condition, the appraisal cost is expectedly high because the appraiser will have to put more effort.
Tip#3: Ask Different Agents for a Price Estimate
Apart from the appraised value, your home’s fair market value is best estimated through a comprehensive market analysis (CMA). A good CMA is key to creating the right selling strategy and setting the right price point. While real estate agents and brokers are expected to come up with the best CMA, there is really no such thing as a very, very accurate CMA.
You can raise your chances of getting the right price though if you ask different real estate agents. This is most recommended when there are only a few comps in your neighborhood (or none at all).
Tip#4: Know Related Taxes
Any real estate transaction is subject to tax. However, the kind of tax depends on your location and situation. Unlike other states in the U.S., Georgia has friendlier tax implications when it comes to inherited property. The state government doesn’t require inheritance and estate tax; but they do impose a capital gains tax once you sell your inherited house (much like non-inherited properties).
If the difference between the property’s value upon death of decedent and your current sale price exceeds $500,000 (for couples) or $250,000 (for individuals), a capital gains tax will be imposed. Otherwise, you’ll be exempted from paying this tax.
Tip#5: Debts, Liens, and Outstanding Mortgage
Inherited properties may still have some mortgage left. It’s always best to know if there are still some payables, because you’ll have to disclose this to your buyer. In addition, if the property has some other liens, you’ll have to inform them of the sale you’re making.
For other information on selling inherited homes, or if you’re looking for a cash buyer who can buy your house in cash in as fast as two (2) weeks, Spire Home Buyers is here for you. You can contact us at (678) 318 – 1801 or leave us a message in the form below and we’ll contact you in the soonest time possible!