How to Sell Your Inherited Home Quickly to Escape Tax Penalties
An inherited home can be a great things. It can also become a nightmare to manage, and bring a lot of extra debt and taxes. How can you sell your inherited home quickly to avoid the pain, and reap the best intended rewards?
Real estate often makes up the bulk of the inheritance people recieve. This can be a great asset. Yet, many are increasingly realizing it can be more of a burden than a blessing. It really comes down to how you handle it, and how fast.
Avoiding Probate & Extra Taxes
Savvy families, benefactors and financial advisors often go well beyond the basic will in order to beat the taxman, retain privacy and ensure heirs get more benefits with less stress and financial strain. These tools include inheritable IRAs as well as trusts and corporations and partnerships.
Even if inherited homes are held in one of these legal vehicles you may still need to and benefit greatly from selling the real estate fast.
If your benefactors failed to take advantage of these vehicles and estate planning and asset protection tools, make sure you don’t waste a moment in setting them up to protect your estate for your lifetime and heirs.
Taxes that Come with Inherited Property
Taxes that can come with an inherited property can potentially include:
- Federal estate taxes
- State estate taxes
- Additional state and federal income taxes
- Property taxes
- Capital gains taxes
If you inherit a lot and pay a little in taxes it can still be a net win, even if a lot more is given up to the taxman than your benefactor expected. However, heirs can also lose a lot, if they aren’t smart and fast to act.
If you’ve been doing good with taxes, but then income from a new property throws you into a higher property tax bracket, you could pay more taxes on all of your income.
Above certain thresholds you could be pay estate taxes on the value of anything you get to both the state and federal government. Federal estate taxes are 40%! State taxes can be as high as 20% on top of that. That means giving up 60 cents on every dollar above the exemption. That’s just for the estate taxes portion of taxes.
The Pain of Waiting to Sell Your Inherited Home
There can be a lot of stresses and expenses associated with waiting to sell an inherited property too.
- Costs and loss associated with repeatedly travelling to show the property to buyers
- Risk of squatters moving in and claiming title
- Risk of vandalism and theft
- Ongoing maintenance costs
- Monthly holding costs (utilities, property tax, insurance, plus mortgages and association dues)
- Incurring greater capital gains taxes
- Penalties and fines for not liquidating and paying taxes due on other parts of inheritance
With all this in mind it can be far smarter and more profitable to sell an inherited home and put the money into a tax protected investment account, like a self-directed IRA.
How and Where to Find Buyers for Your Inherited Home
Even in the best scenarios it can just be wiser to find a cash buyer for your home fast. If the home is aged or there is deferred maintenance, out of date interiors or exteriors or liens, then it may be absolutely necessary to find a cash buyer who is an experienced property investor and is willing and able to take on these challenges. The best will help cover any related costs and may be able to refer you to organizations for packing and shipping any items you want from the property or sending them to other heirs, or donating to charity.
Find a qualified cash buyer for your inherited home near you via the RealMarketExperts.com directory.