Selling an inherited house is often a financial windfall, but it can also be a long, complicated process. Your experience depends on how the property was handed down to you and the state of the deceased's finances.
Your first step is to establish your legal right to sell. If you inherited property through a trust, this may be just a formality. However, if the owner died without a will, the property may have to go through probate: a lengthy, probate, a court-administered process that determines who has a legal right to the estate.
Once the home has been legally transferred to you, your options for selling the property are the same as any other home sale. You can sell on the open market with a real estate agent, or you can opt to sell the house fast to a cash buyer or iBuyer.
Whichever path you choose, you need to know about your selling costs and potential tax liabilities.
If you want to sell quickly, Clever Offers is your best option for a fast offer on your inherited property. Clever will connect you with a top local realtor, who will bring you fair offers from top cash home buyers in your area. Get fair cash offers from top local buyers now!
Each state has its own inheritance laws and procedures. Find your home state below to learn the specifics about how selling inherited property works there.
Understanding the probate process
Before you can sell an inherited house, the estate must first go through a legal process known as probate, which can last up to 24 months.
If the will is clear and uncontested, or if your property was handed down through a trust, probate may be over relatively quickly. Estates without a will and/or many outstanding debts will take longer.
The probate process begins when a court reviews the deceased's will to determine its validity and authenticity. All assets are frozen and cannot be sold during this review period.
Once the court approves the will, an executor of the will is appointed to act on behalf of the wishes of the deceased. The executor is responsible for paying all debts, including:
- Any remaining mortgage balances.
- Medical bills.
- Hospice and nursing facility expenses.
- Burial and funeral costs.
- A final tax return covering all federal, state, and local taxes owed.
After repaying all debts, the executor distributes what's left of the estate to the heirs. You can sell the inherited property once this process is completed.
Probate generally follows the same procedure from state to state, but each state has its own rules. For example, in California, an estate worth about $160,000 or less can use a simplified probate process. Compare that to Wisconsin, where a simplified process is only available for estates worth $15,000 or less.
Find your home state below to learn the specifics about how probate works there.
Selling inherited property with multiple owners
Sharing an inherited property with others means you need to come to an agreement with the other heirs. It's crucial to have an honest discussion to find out what each heir wants to do with the property.
If you choose to sell, you'll have to coordinate with the other owners about the listing price, marketing the home, and negotiating the final sale. A real estate agent with experience in handling inherited properties can help you navigate all of this.
If you hold on to the property, you can rent it out, make improvements to sell it later, or move in and make it your home.
Holding on the property means sorting out joint ownership. You have a couple of options to consider here:
Joint tenancy means there is an equal portion of property shares among the owners. In this arrangement, all owners must agree before the property or a portion of it can be sold. If one of the owners dies, their share is divided among the surviving owners.
Tenancy in common, on the other hand, gives each owner the freedom to sell their share independently. One owner could even buy out another owner's share in this arrangement.
Taxes on the sale of an inherited property
| Capital gains tax | Taxes paid to the government for profits earned from the sale of an asset |
| Inheritance tax | State tax paid by a person who inherits a property. Only six states charge inheritance taxes |
| Estate tax | Federal or state tax on a person’s assets after death. Only 12 states charge estate taxes |
Taxes are a legitimate concern when selling an inherited house. Many sellers think they'll get hit with a huge, unaffordable tax bill. Fortunately, there are many benefits that can help you avoid or reduce your tax burden.
1. Capital gains tax for inherited property
Inheritors only need to pay capital gains taxes if they sell their inherited property at a gain. The taxes also get reduced through a provision known as the "stepped-up" tax basis.
The stepped-up tax basis allows those who inherit a house to benefit from a lower capital gains tax rate after selling the property. Here's how it works:
- During the probate process, an appraiser determines the home’s fair market value (FMV) on the date of the original owner’s death.
- The home's new FMV is known as the "stepped-up basis."
- When you sell the house, you get taxed on the difference between the sales price and the stepped-up basis – not the owner's original purchase price.
Capital gains example
- You inherit a house with an FMV of $300,000.
- You sell the property at a price of $325,000 after owning it for one year.
- You owe capital gains taxes on $25,000 in profit, and the tax bill would come out to $3,750, based on a 15% tax rate.
Long-term capital gains are currently taxed at 0% to 20%, depending on your income and tax filing status.[2]
Capital gains may also be taxed at the state level. Contact your accountant or real estate attorney for professional advice.
A capital gains rate of 0% applies if your taxable income is less than or equal to:
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- $47,025 for single and married filing separately
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- $94,050 for married filing jointly and qualifying surviving spouse; and
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- $63,000 for head of household.
A capital gains rate of 15% applies if your taxable income is:
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- More than $47,025 but less than or equal to $518,900 for single;
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- More than $47,025 but less than or equal to $291,850 for married filing separately;
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- More than $94,050 but less than or equal to $583,750 for married filing jointly and qualifying surviving spouse; and
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- More than $63,000 but less than or equal to $551,350 for head of household.
However, a capital gains rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate.[1]
Here are a few ways to avoid owing capital gains taxes on an inherited property:
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- Sell immediately. If you sell the home quickly, there will likely be very little gain in value, meaning you won't owe much in taxes.
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- Move in. If you live in the home for two years within a five-year period, the home is considered your primary residence. If you sell after that period, the IRS allows a deduction of $250,000 of capital gains for single filers or $500,000 for married couples filing jointly. To qualify, you must use the inherited home as your primary residence for two years out of a five-year period, and you must not have used the capital gains exclusion within the past two years.
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- Rent it out. Turning the house into an investment property allows you to make money on the property without selling it. If you wish to sell in the future and buy another investment property, you can defer the capital gains through something called a 1031 exchange.
- Disclaim the property. If you want nothing to do with the property, you can disclaim your inheritance. You won't receive anything, so there will be nothing to sell.
2. Inheritance tax
Thankfully, most people who inherit a home won't have to pay inheritance taxes.
Only six states – Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania – have inheritance tax laws. The rules differ by state, the estate size, and asset type.
Some states exempt the deceased's spouse and children, which means houses that go to them aren't subject to the inheritance tax.
3. Estate tax
Only high-value estates get charged federal and state taxes.
Estate taxes get charged on a person's assets after death. In 2024, the federal estate tax applied to estates worth more than $13.61 million. That threshold rises to $13.99 million in 2025.[3]
Twelve states and the District of Columbia also collect estate taxes at the state level. The exemption amount is over $1 million for each state that charges the tax.
Estate and inheritance tax locations
Here is a map showing the states that pay inheritance and estate taxes. The only state that pays both is Maryland.
Documents required for selling an inherited property
Proof of inheritance documents
These documents prove that you inherited the property and have a legal right to sell it.
- Probate documents: Issued by the court. These documents include the will, if available, as well as any orders or judgements made by the probate court.
- Letters of administration / letters testamentary: Issued by the court. These documents establish who is the legal executor or administrator authorized to act on behalf of the estate.
- Affidavit of heirship / court orders: Issued by the court. If there was no valid will or challenges to who is the rightful heir, these documents are necessary to establish the legal right to sell and protect against future challenges from others.
- Transfer on Death Deed: Look for this with the deceased's important documents. Some states allow a Transfer on Death (TOD) deed that can allow the estate to avoid the probate process and have the property pass directly to the heirs.
- Power of attorney documents: Drawn up by an attorney. If you are selling the property on behalf of other heirs, you'll need notarized proof that you are authorized to act on their behalf.
Title and deed documents
These documents are always necessary when selling a home to research the history of the home and ensure a smooth transfer of ownership to the buyer.
- Property title and deed: Prepared by an attorney or title company. A title and deed describes the property and its boundaries and it establishes ownership rights. The title must be free of liens and encumbrances, which can be found by a title company.
- Previous deeds and title transfer documents. Look for these with the deceased's important documents. These documents establish a history of transfers of the property and can help the title company establish a clear title.
- Title search / title insurance policy: Prepared by a title company. A title search looks for liens, encumbrances, unpaid debts, and other claims against the property. All of these must be resolved before selling. A title insurance policy protects the seller and buyer in case the title company misses something.
Tax documents
These documents help prove that all taxes have been paid on the property.
- Property tax documents: Available from tax authorities. Tax bills and receipts will help you prove that all taxes have been paid.
- Estate tax returns: Available from tax authorities. If there is an estate tax in your state, these documents outline all liabilities and show proof of payment.
Mortgage documents
If the property has a mortgage, these documents will detail what is owed and how to settle these debts before selling.
- Loan documents: Obtain these from the mortgage company. These include the loan agreement, promissory note, and mortgage or deed of trust. These documents should detail the loan terms and repayment schedule.
- Mortgage and Loan payoff documents: Issued by the mortgage company. These documents prove the terms have been satisfied for the mortgage or any other loans taken out with the property used as collateral.
Closing documents
These documents are standard for every home sale and are prepared by a real estate agent, attorney, or a title company.
- Purchase agreement: This is the contract between the seller and buyer that details the terms of sale, including purchase price, contingencies, and closing date.
- Escrow documents: These documents are a set of instructions for the procedures of the sale, including delivery of documents and transfer of funds.
- Closing statements: These documents outline the final terms of the sale and officially transfer ownership of the property to the buyer.
Other documents
These documents can help you justify the listing price and give the buyer peace of mind during negotiations.
- Home improvement and maintenance receipts. Proof that the property has been well maintained demonstrates value for the buyer.
- Inspection reports. Issued by a home inspector. A home inspection report shows that you have investigated the condition of the property and a professional has evaluated it for any potential problems.
- HOA documents. Issued by the HOA or condo association. Receipts and records of compliance tell the buyer about the HOA rules and regulations and show that all dues are up to date.
Should you sell an inherited house?
Selling your inherited property may be the best decision if:
- You want to access the funds right away. Selling an inherited house can free up cash to pay off your primary mortgage, buy a new home, pay off consumer debts, invest for retirement, or fund another life expense.
- You want to avoid homeownership costs. Even if there's no mortgage to pay off, there are a lot of costs associated with owning a home which can add up to thousands each month.
It may be more prudent to wait to sell your inherited property if:
- It's not a seller's market. A seller's market occurs when housing demand exceeds supply – meaning there are many interested buyers but not enough housing to meet that demand. If you can afford the upkeep, selling once the market recovers could mean a big jump in the selling price.
- You're looking at a large capital gains tax. If your home appreciated significantly during the probate process, you may owe taxes on the profit. You can reduce your capital gains tax burden if you wait a year to sell. If you choose to make the home your primary residence for at least two years, you can avoid capital gains altogether.
- You need more time to prep the home for sale. If there are lots of personal belongings inside to be sorted through, it may take some time to determine what to keep, sell, or donate. Waiting can also give you the time to make renovations and repairs to the home before putting it on the market.
Options for selling an inherited house
Sell as-is to a cash home buyer
Companies that buy houses for cash are a good option if you need to sell ASAP since they can close on the sale within weeks.
Cash buyers - including iBuyers and real estate investors – pay all cash for your home with no contingencies. You can avoid buyer showings, home inspections, appraisals, and a drawn-out closing process.
Cash buyers may offer you less than what your home is worth. Most investors pay between 50% to 75% of its fair market value and focus on buying distressed properties or homes requiring repairs. But they provide the quickest, most convenient option.
Some people who inherit a home may not want to worry about upkeep and maintenance, which can cost hundreds (if not thousands) of dollars each month. Selling to a cash buyer solves this problem, closing as quickly as 14 days after signing the contract.
Compare offers from top cash buyers, plus get an expert realtor's opinion on what your house is worth.
Get Cash OffersList with a real estate agent
If you have more time to sell your inherited property, it may be a good idea to list it with the help of a local realtor — preferably from a brokerage that offers low commission rates. Here are a few key benefits:
A good agent will help you determine the fair market value of your inherited property with a comparative market analysis (CMA) report and help you set an optimal listing price.
List agents market and advertise your property online on popular real estate websites like Zillow, Trulia, and Realtor.com, attracting more potential buyers.
You gain the professional guidance of an expert. A realtor can help you negotiate with buyers, weigh offers, and guide you through the closing process.
However, listing a home with a realtor is more time-consuming when compared with selling to a cash buyer or investor. It currently takes U.S. homeowners an average of 63 days to receive and accept an offer.[4]
Add the typical 30 to 45-day closing process and your real estate transaction may take at least three months, from start to finish.
Selling an inherited house: FAQ
What is the best thing to do with an inherited house?
The best thing to do with an inherited property depends on your personal circumstances and long-term goals. You can either keep the house and live in it, rent it, give it away to family members, or sell it. Learn whether or not you should sell an inherited property.
Can I sell inherited property fast?
Yes. It takes an average of three months to sell a house on the open market from start to finish. But several companies that buy houses for cash can close in as quickly as 14 days. Learn more about your selling options and which route works best for you.
How can I avoid taxes on the sale of inherited property?
You might be able to avoid capital gains tax on the sale of the inherited property if you decide to live in the home for at least two years. The home sale tax exclusion allows homeowners to exclude up to $500,000 on home sale gains. Read more about taxes on the sale of inherited property.
