Selling an Inherited Property in North Carolina

Inheriting a property can be emotionally challenging and impact your finances. Will the property require costly upgrades and repairs? What are the tax implications? Is there a will in place, or will you need to navigate through the probate process? Despite the challenges, inherited properties present a unique opportunity for real estate investors and buyers seeking a discounted property they can customize to their liking. Selling an inherited property involves specific considerations and steps that homeowners need to address. This guide will outline the essential process of selling an inherited property in North Carolina to maximize returns.

How To Sell An Inherited Property in North Carolina

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

When dealing with inherited properties accompanied by a will, the first step involves determining the executor of the estate. This crucial role ensures that the deceased individual’s wishes are executed during the probate process. Assets specified in the will cannot be sold until the Court validates the document. Once authorized, the executor gains the authority to fulfill the deceased’s intentions. However, complications may arise if the will is disputed or nonexistent, potentially leading to a lengthier process requiring Court intervention.

The probate court will appoint someone not associated with the family as an administrator to the estate. These administrators play a similar role as an executor; they are responsible for carrying out the wishes of the deceased as stated in the will, as well as paying off any of the estate’s debts and distributing any assets. They may also determine if any real estate assets will need to be sold to pay off the estate’s debts, including back taxes, mortgages, etc.

Working with Lawyers and Real Estate Agents

Probate can be a complex process, making it essential to enlist the guidance of a seasoned attorney to navigate the potential challenges of selling an inherited home. Once authorized by the probate court to proceed with the property sale, the next strategic move is to collaborate with a real estate agent familiar with inherited properties. A proficient agent well-versed in probate matters comprehends the intricacies and guidelines associated with such transactions. They can assist in identifying the ideal buyer to maximize the sale price of the inherited property. Moreover, they serve as valuable advisors in determining worthwhile investments for property enhancements versus futile expenditures. Following their recommendations could significantly impact the speed and profitability of the sale, preventing the scenario of a prolonged listing period and below-market sale price.

Resolve Any Debts

When you hear the word “inheritance” do you think of a mysterious great-aunt leaving you a million-dollar mansion in the woods, or do you understand the reality of having to deal with a property that might have liens against the title, years of back taxes, as well as a mortgage that leaves you with the ability to make much of a profit after a sale? Sadly, dealing with a loved one’s passing often means dealing with their debt, whether that’s in the form of taxes, a mortgage, or maxed out credit cards. Any assets you inherit must go to paying off that debt first before you can see one dime of the estate. While a house may seem like a huge asset, it also can be a huge money pit. An experienced estate advisor can help you research your options when it comes to dealing with an estate.

Clean & Restore the Home

Once ownership has been decided and the property is considered yours, your next step will be to decide whether you want to live in it, rent it out, or sell it. Many times, when a loved one passes they leave behind a house that is not in the best of shape. Whether the property hasn’t been kept up in the past decade and needs major cleaning and repair, or there were never any upgrades done and the house will need to be completely renovated to make it “market ready”, this is the part of an inheritance that is often forgotten about.

Do all heirs have to agree to sell the property?

When it comes to selling an inherited house or property, the heirs do not necessarily have to agree if ownership has been established by a will or through the probate court. However, in cases where ownership has not been determined, such as in estates without a will or with a court-appointed administrator, unanimous agreement among all heirs is required for the sale to proceed. This requirement also extends to properties auctioned by the court to settle the estate’s debts. In situations where a buyer acquires a house at auction but faces opposition from one or more heirs, the sale is typically halted until the disagreement is resolved and a settlement is reached.

How to Settle a Disagreement

When Heirs in North Carolina are in conflict over an estate, it’s crucial to have an executor appointed to oversee the process. The executor plays a key role in ensuring that the deceased’s wishes, as outlined in the will, are carried out smoothly, helping prevent disputes over asset distribution. If disagreements persist and there is no appointed executor, seeking the assistance of a mediator could be the next step. Engaging a neutral third party to facilitate discussions can often be a cost-effective alternative to resolving conflicts outside of probate court.

Best Practices

But what if the issue is around the executor themselves? Disputes can occur when a family member is named as the executor or trustee of a will, causing strife with the other family members. If this has happened to you, an option is for the person to decline the appointment and choose an independent fiduciary, such as an estate-planning attorney, to administer the will. Stepping back while a neutral party steps in might not just keep arguments from cropping up, but might also give everyone the time and space to deal with difficult emotions before it permanently damages your family. 

How is inherited property taxed when sold?

Did you know that State and local governments in the United States generated over $5.3 billion in revenue from estate and inheritance taxes in 2020? That’s a substantial amount! Given the variations in laws and regulations across different states, it’s crucial to conduct thorough research and seek guidance from a knowledgeable lawyer specializing in taxes and estate planning. Whether you are faced with a surprise inheritance or in the process of drafting your will, expert advice is essential for navigating this complex terrain.

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

Understanding Capital Gains Tax and State Requirements

Capital gains tax is incurred on the appreciation of assets inherited through an estate, payable only upon the profitable sale of the asset, not upon inheritance. This tax is calculated based on the difference between the selling and purchasing prices of the property. While most states mandate the payment of this tax on inherited properties, exemptions may apply for sales below a certain threshold. For instance, in Washington State, no capital gains tax is imposed on properties sold for under $250,000. Various legal options may exist to mitigate or eliminate the capital gains tax obligation in your state, such as reinvesting the proceeds in another property. It is advisable to seek guidance from a knowledgeable tax attorney familiar with the applicable laws in the North Carolina area before proceeding with the property sale. Contact AIP House Buyers at (336) 707-5223 for expert advice on navigating capital gains tax implications.

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

Most individuals are fortunate to reside in one of the 44 states that do not impose an inheritance tax. However, if you happen to live in Maryland, Nebraska, Kentucky, New Jersey, Pennsylvania, or Iowa, you will be subject to inheritance tax as a beneficiary/heir. In these states, taxes are levied on inherited assets and properties. The good news is, if the deceased lived in a state without an inheritance tax, you may not have to pay anything, even if you reside in a tax-imposing state.

Documents required to sell an inherited property

To show legal ownership and place a property for sale, you will need to have a copy of the documents issued by the court that grant you the legal authority to act as the executor or administrator of the estate. These documents will establish your ability to manage the inherited property. Once a buyer is found and you are ready to close, you’ll need the deed, title insurance, or other relevant legal records to establish the legal ownership of the inherited property. 

Do your research regarding what additional documents may be needed to sell an inherited property! Some jurisdictions may require additional property-related documents, including previous surveys, inspections, or any other relevant paperwork that pertains to the property’s condition or history.

Is there an easier way to sell?

Yes, there is! AIP House Buyers 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. We are local company that has purchased many houses in the Greensboro area, we have 5 star google reviews and we will make you a guaranteed cash offer!