Selling an Inherited Property in Massachusetts

Selling an inherited property can be a complex process, but with the right information and resources, it can be a smooth and successful transaction. Whether you’re navigating the legal requirements, dealing with family disagreements, or ensuring you have all the necessary documents, being well-prepared is key. By consulting with experienced professionals, such as estate advisors, real estate agents, or attorneys, you can make informed decisions that align with your goals and avoid costly mistakes. With careful planning and attention to detail, selling an inherited property can be a positive step forward, allowing you to move on and make the most of your inheritance.

How To Sell An Inherited Property in Massachusetts

So you’ve inherited a property and you’re not sure what happens next. In most states, the inherited property must go through a probate process so the courts can determine who is the legal owner. Probate is a legal process in which the Court legally transfers ownership of the estate’s assets to one or more beneficiaries and/or Heirs. Depending on the state of the will (if there was one), this process can be very fast or very slow.

Determine the Executor

For inherited properties with a will, the process of establishing an executor of the estate is usually straightforward. One of the most important functions of a will is to designate an executor who can carry out the deceased’s wishes during probate. Any assets listed in the will, including real estate, cannot be sold until the will is validated by the court. Once the will is approved, the executor is legally empowered to act on the deceased’s behalf. However, if the will is contested or there is no will in place, the process may be delayed, and the court will need to get involved.

In cases where there is no will or the will is contested, the probate court will appoint an administrator to manage the estate. This administrator, who is typically not a family member, performs duties similar to those of an executor. They are responsible for carrying out the deceased’s wishes as outlined in the will, settling any estate debts, and distributing the assets. Additionally, the administrator may determine if any real estate assets need to be sold to cover the estate’s outstanding debts, such as unpaid taxes or mortgages.

Working with Lawyers and Real Estate Agents

Probate is a complex process, which is why it’s essential to work with an experienced lawyer who can help you navigate the potential challenges when selling an inherited home. Once you’ve received the probate court’s approval to proceed with the sale, the next step is to partner with a real estate agent who has experience with inherited properties. An agent with probate expertise will be familiar with the specific regulations and nuances involved in selling a property through this process. They can guide you in finding the right buyer, ensuring you get the best price for the inherited home. Additionally, a knowledgeable agent will offer valuable advice on which repairs and upgrades are worth investing in to maximize the property’s value and which ones may not provide a return on investment. Following their recommendations could mean the difference between selling the home quickly and for a profit, versus having it linger on the market and ultimately sell for less than its potential value.

Resolve Any Debts

When you hear the word “inheritance,” do you picture a grand, mysterious mansion left to you by a wealthy relative, or do you understand the reality that inheriting a property often means dealing with challenges such as liens against the title, years of unpaid taxes, or an existing mortgage that leaves little room for profit? Unfortunately, dealing with a loved one’s passing frequently involves managing their debt—whether it’s back taxes, a mortgage, or outstanding credit card balances. Before you can access any of the estate’s assets, these debts must be settled first. While a house may appear to be a valuable inheritance, it can also become a costly burden. An experienced estate advisor can help you navigate the complexities of managing an estate, offering advice on your options and helping you understand whether holding onto or selling the property is the best course of action.

Clean & Restore the Home

Once ownership of the inherited property has been established and it’s officially yours, the next step is to decide what to do with it: live in it, rent it out, or sell it. In many cases, when a loved one passes away, they leave behind a house that may not be in the best condition. Whether the property has suffered from years of neglect and requires significant cleaning and repairs, or if it was never updated and needs a complete renovation to be considered “market ready,” this aspect of inheritance is often overlooked. The emotional strain of losing a loved one combined with the financial and time commitments of addressing a property’s condition can make this decision particularly challenging. Understanding the extent of the work needed and the costs involved can help you make the right choice moving forward.

Do all heirs have to agree to sell the property?

No, heirs do not always have to agree to sell an inherited house or property if ownership has been clearly established through a will or by the probate court. If the will or probate process has determined the ownership, individual heirs are not required to agree to the sale in the same way they would if ownership was still in dispute. However, if ownership has not been established, such as when there is no will or the property is managed by a court-appointed administrator, then all heirs must agree to the sale. This also applies to properties that have been put up for auction by the court to pay off the estate’s debts. In cases where a property is sold at auction, if one or more heirs disagree with the sale, the transaction may be paused until the disagreement is resolved and a settlement is reached.

How to Settle a Disagreement

When heirs disagree about selling an inherited property, there are several ways to resolve the issue. The first step is ensuring that the deceased person has designated an executor in their will. The executor’s role is to ensure that the deceased’s wishes are followed, which can help prevent disputes about how assets, including the property, will be handled. If there is no designated executor or if the will is being contested, the next step may involve hiring a mediator. A neutral third party can help facilitate conversations and find a resolution, often at a lower cost than a legal battle in probate court.

Best Practices

Disagreements can also arise around the executor themselves, particularly if a family member has been named in this role, leading to tension with other family members. If this situation occurs, the appointed executor can decline the position and opt for an independent fiduciary, such as an estate-planning attorney, to administer the estate. This neutral approach can help prevent ongoing conflicts and allow family members the space they need to process their emotions. Ultimately, stepping back and allowing a third party to manage the process might help preserve family relationships and ensure that the estate is handled fairly and efficiently.

How is inherited property taxed when sold?

State and local governments in the United States collected over $5.3 billion in revenue from estate and inheritance taxes in 2020. That’s a lot of taxes! But with laws and regulations different from state-to-state, you’ll want to do your research and contact a lawyer with knowledge and experience of taxes and estate planning as you deal with a surprise inheritance or you’re writing your own will. 

State Tax Laws

Each state has different laws regarding inheritances. In the case of the sale of an inherited property, states may take an estate tax, an inheritance tax, as well as a capital gains tax on your inheritance. Currently, twelve states have an estate tax, 5 have an inheritance tax, and one has both an estate and inheritance tax.

Capital Gains Tax on Inherited Property

What is the capital gains tax and which states require it? The capital gains tax is paid on the appreciation of any assets that an heir inherits through an estate but it is only levied once the asset is sold for a profit, not when you inherit. This tax is then paid on the difference between the sale price and the purchase price of the property. Most states require this tax paid on an inherited property, but there may be exemptions for individuals selling a property for less than a certain amount. An example is Washington State, where the capital gains tax is not levied on homes and/or properties sold for less than $250,000. There may also be other legal ways to get around or reduce the capital gains tax in your state, including reinvesting the money in another property. Consult with a tax lawyer knowledgeable of the laws in the area you will be selling before proceeding with the sale of your property.

Estate Taxes

An estate tax is a tax paid directly out of the estate to the state before anyone is able to inherit it. Worried that you might get a huge hit taken from the estate? Don’t worry! The estate tax has a minimum threshold which in 2023 was $12.92 million for individuals. This means that the government is not able to charge you an estate tax unless your total taxable estate is worth $12,920,001. The remainder is passed on estate tax-free. Despite having such a high threshold, each year more states repeal their estate tax laws, losing out on millions of dollars of revenue.

Inheritance Taxes

Only six states have an inheritance tax, meaning that it is likely that you are in the lucky majority that won’t have to deal with this. But if you live in one of those six states – Maryland, Nebraska, Kentucky, New Jersey, Pennsylvania, and Iowa – you as a beneficiary/Heir to an estate will be required to pay taxes on your inherited assets and properties. But don’t worry – even if you live in a state that has an inheritance tax, you won’t have to pay a dime if the deceased lived in one of the 44 states that does not have this tax.

Documents required to sell an inherited property

To prove legal ownership and list an inherited property for sale, you will need to provide the court-issued documents that grant you authority as the executor or administrator of the estate. These documents validate your right to manage and sell the inherited property. Once you have secured a buyer and are ready to close the sale, you will also need to provide the deed, title insurance, and other pertinent legal records that establish ownership of the property.

It’s important to do thorough research on any additional documents that may be required to sell an inherited property. In some jurisdictions, you may need to provide additional paperwork, such as past surveys, inspections, or other relevant documents that pertain to the property’s condition or history. Being prepared with all the necessary documents can help streamline the sale process and prevent any delays.

Is there an easier way to sell?

Yes, there is! Custom Realty Solutions, LLC is a direct house buying company that has built our reputation on buying inherited houses for cash with less stress and less fees. Contact us today and get a competitive cash offer for an inherited house, condo, or property. We buy homes in any condition, and we can also help with the convoluted process of selling a house in probate! Let us make your home selling experience as straightforward and stress-free as possible so you can move on with your life.

Even if the house suffered major damage in the last storm or was neglected for years and needs a large amount of upgrades to make it “market ready”, once you accept our fair cash offer our team of experts will handle all of those expensive repairs so you don’t have to! We make selling an inherited house easy.