If you recently inherited a house with no mortgage, congratulations! You have a great advantage. That’s because nobody will be after your fair market value while they try to get some of the money from the sale of the house.
Does an estate have to go through probate?
Knowing that you inherited a house with no mortgage, doesn’t mean that there is zero tax. You will have to pay property taxes and capital gains tax once you sell the property. Also, if you live in the house and it becomes your primary residence, you will not have to pay capital gains tax. If you were to sell the house and keep it for a couple of years, you would have to pay capital gains tax. But this is not the case if you were to sell the house within a year or two from when you inherited it. If there was no mortgage on the property, then your fair market value will be lower than if there was a mortgage. Keep this in mind as buyers may want to offer less than fair market value as they know they can easily get money from your sale as there is no mortgage involved.
Probate is not necessary but you need to make sure that all the debts are paid off before the fair market value is determined. In case any of your distant relatives wish to contest the will, then a probate may be required. If this happens, it’s going to take a long time and become expensive for you. It’s best that you contact an attorney with ease in these matters as soon as possible after receiving a copy of the will. Existing mortgage debt is not considered a debt. Federal estate taxes also don’t have to be paid.
Inheriting a house needs financial advisors to help you manage the fair market value. Reverse mortgage companies also offer help in cases like this where you don’t have to pay fair market value. Inherited properties also do not require fair market value from the estate.
In France, when a property is inherited by more than one heir at the same time, only one heir will be responsible for paying inheritance tax. In other words, all heirs have to pay an equal portion each towards Inheritance Tax after the fair market value has been identified. Determine how much each heir should pay in fair market value can be determined by fair market value percentages of individual inheritors which would then allow fair market value amounts to be equally distributed amongst a group of co-inheritors. Mortgage lenders also have a fair amount of influence as to what the fair market value should be.
Free fair market value screenings are also available to help heirs determine fair market value. These fair market value screenings do not need to be paid by the heir nor is there any obligation involved with these fair consulting services.
Home insurance may be different in cases where fair market value is not needed from the estate. This is because monthly home insurance premiums are often paid for fair market value amounts rather than just the cost of replacing what you have in case of fire or other catastrophic events. With an inherited property that has no mortgage, you will have a different fair market rate which should reflect your price range and needs.
What do you know about fair market value?
The fair market value is the price that the property should be worth on the open market between a willing buyer and willing seller who are both acting knowledgeably, prudently, and without compulsion. The fair market value should take into consideration all relevant facts, including comparable sales evidence of recently sold property in your area evidence of properties currently available in your area evidence of recent appraisals information about the condition of the property other factors affecting real estate values in your area. Does living in an unencumbered home have any tax advantages vs just owning land?
How is inherited property taxed when sold?
If a house is sold within one year or two from when you inherit it, capital gains tax will apply in which case you will lose up to 15% in taxes on any profit gained from selling your inherited house. Preferably fair market value would take into account the fair market value of the land if it is owned separately by another party or not already under their name at that time.
How long can I live in my inherited home before having to pay Capital Gains Tax?
If you live in an inherited home and make it your primary residence, there is no capital gains tax involved after the fair market value has been established. You can live in the home for up to two years without having to pay capital gains tax as this is the length of time fair market value remains unchanged by fair market value leaving fair market value unaffected.
What taxes are applied if taxes are not paid?
Property taxes that have gone unpaid may eventually lead to a tax sale in which case you will lose ownership rights because it becomes the property of the taxing authority which is usually owned by local or state government. This can be prevented by paying outstanding taxes off beforehand, however sometimes before an auction takes place, homeowners are given certain options for payment plans depending on how much money they owe.
Capital gains tax on inherited property
Capital gains tax varies according to fair market value. If the fair market value is lower than what was paid for it then you will have a capital gains tax that is based on fair market value minus fair market financing in which the fair market value amount would be taxed accordingly. In this case, back-taxes would not add to fair market value but instead could shield from paying import taxes such as property taxes and income taxes due to being under budget at the time of acquisition. You have to pay capital gains taxes if the fair market value is greater than what was paid for it as well as paying capital gains tax on fair market financing if the fair market value is equal to fair market value.
I inherited a house and want to sell it
When you inherit a house and want to sell it the best option is to consult a professional fair market value appraisal. In some cases, the fair market value may be lower than what you thought it was, and in others higher.
The fair market value is important to know because the capital gains tax on your inherited house depends on it. If it’s lower, you will pay fewer taxes when you sell it. If its fair market value is high, so is the capital gains tax you owe when selling the house.
Sell inherited property fast and easily!
If you’re a homeowner looking to sell your house fast and need cash in exchange, ASAP Cash Offer can most definitely help you! We purchase and will pay cash to homeowners whatever the current market conditions would be. This can be beneficial if you don’t want to bother with the repair costs waive inspection altogether, or just want out of your current situation as soon as possible. Just Fill up the form below, or call us at (805)427-8312 and you will receive a fair cash offer for your home within 24 hours, with no hidden fees in the deal or closing costs like listing with the realtors!