Selling an Inherited Property in Texas

Inheriting a property can be overwhelming, especially when you’re out of state or the house is far away. Whether it’s a familiar family home or a distant relative’s property you’ve never seen, you’re likely concerned about its condition, needed repairs, mounting property taxes, and navigating the complicated probate process with attorneys.

This comprehensive guide helps homeowners through the process of selling an inherited house, providing essential information for a successful fast-cash transaction in Texas, TX.

How To Sell An Inherited Property in Texas

You’ve inherited a property and aren’t sure what to do next. In most states, the property must go through probate where courts determine legal ownership. Probate is the legal process where the Court transfers ownership of estate assets to beneficiaries and/or Heirs. This process varies in length depending on whether there was a will and its status. If you’ve been designated as the Executor, you’ll work directly with an attorney and the courts to settle the estate.

Determine the Executor

For properties with a will, identifying the executor should be straightforward. A key element of any will is naming an executor who can carry out the deceased’s wishes through probate. Assets in a will cannot be sold until the will is validated by the Court, but once approved, the executor can act according to the deceased’s wishes. If the will is contested or doesn’t exist, the process becomes more complex as the Court takes a more active role.

The probate court will appoint someone unaffiliated with the family as an administrator to the estate. These administrators function like executors; they’re responsible for executing the deceased’s wishes as stated in the will, settling estate debts, and distributing assets. They also determine if real estate must be sold to cover the estate’s financial obligations, including back taxes, mortgages, and other debts.

Working with Lawyers and Real Estate Agents

Probate is complex, requiring an experienced lawyer to help navigate potential pitfalls when selling an inherited home. Once you have the probate court’s approval to proceed with the sale, many people work with real estate agents experienced in inherited properties. However, at Starfish Group Properties, we offer a more streamlined alternative – we buy houses directly with cash in as fast as 7 days, eliminating agent commissions and the traditional selling process. We understand the nuances of probate and can help you sell quickly without the stress of repairs or marketing your property.

Resolve Any Debts

When you think of “inheritance,” do you imagine a mysterious relative leaving you a valuable mansion, or do you understand the reality of dealing with a property that might have liens, years of unpaid taxes, or a mortgage that leaves minimal profit after sale? Unfortunately, dealing with a loved one’s passing often means handling their debts, including taxes, mortgages, or credit card debt. Inherited assets must first satisfy these debts before you receive any proceeds. While a house seems valuable, it can quickly become a financial burden. We at Starfish Group Properties specialize in buying properties with these complications, offering fast cash solutions in as little as 7 business days.

Clean & Restore the Home

Once ownership is established and the property is yours, you’ll need to decide whether to live in it, rent it out, or sell it. Often, inherited properties aren’t in ideal condition. The home may have been neglected for years requiring extensive cleaning and repairs, or never updated and needing complete renovation to be “market ready.” This aspect of inheritance is frequently overlooked but can be costly and time-consuming. When you sell to Starfish Group Properties, we buy the ugliest houses in any condition – eliminating the need for you to invest time and money on renovations.

Do all heirs have to agree to sell the property?

No, Heirs don’t have to agree to sell an inherited house if ownership has been established by a will or probate court. However, if ownership hasn’t been determined, such as with an estate without a will and/or a Court-appointed administrator, then all Heirs must agree to the sale. This includes properties put up for auction by the Court to pay the estate’s debts. If a buyer purchases a house at auction but one or more Heirs disagree with the sale, the purchase must be suspended until the disagreement is resolved and a settlement reached.

How to Settle a Disagreement

There are several options for resolving disagreements among Heirs over an estate, but the first step is ensuring that a loved one has designated an executor. Having a point person responsible for fulfilling the deceased’s wishes as outlined in the will can prevent arguments about asset distribution. If there’s no executor and the will is contested, hiring a mediator may be your next step. A neutral third party to help work through differences will be much more affordable than a lengthy legal battle in probate court.

Best Practices

What if the issue involves the executor themselves? Disputes can arise when a family member is named as executor or trustee, causing tension with other family members. In such cases, that person can decline the appointment and select an independent fiduciary, such as an estate-planning attorney, to administer the will. Stepping back while a neutral party takes over might not only prevent arguments but also give everyone time and space to process difficult emotions before permanent family damage occurs.

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 substantial! With laws varying from state to state, it’s crucial to research and consult with a lawyer experienced in taxes and estate planning when dealing with an unexpected inheritance or creating your own will.

State Tax Laws

Each state has different inheritance laws. When selling an inherited property, states may collect an estate tax, an inheritance tax, and 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

Wondering about capital gains tax and which states require it? Capital gains tax applies to the appreciation of inherited assets, payable only when the asset is sold at a profit—not upon inheritance. This tax is calculated based on the difference between the selling price and the property’s purchase price. While most states enforce this tax on inherited properties, exemptions may apply for properties sold below certain values.

For example, Washington State doesn’t impose capital gains tax on residential properties or land sold for less than $250,000. Additionally, there are legal strategies to potentially reduce or avoid capital gains tax obligations, such as reinvesting proceeds in another property. Before selling your property in Texas, TX, it’s advisable to consult a tax attorney familiar with local regulations. For a faster solution with less tax complexity, Starfish Group Properties offers all-cash purchases in as little as 7 days, buying houses in Fort Worth, Dallas, and across the DFW Metroplex. Contact us at 817-859-6677 for expert advice.

Estate Taxes

An estate tax is paid directly from the estate to the state before inheritance. Concerned about a significant reduction from the estate? Don’t worry! The estate tax has a minimum threshold which in 2023 was $12.92 million for individuals. This means the government cannot charge estate tax unless your total taxable estate exceeds $12,920,001. The remainder passes estate tax-free. Despite this high threshold, more states repeal their estate tax laws each year, foregoing millions in revenue.

Inheritance Taxes

While only six states have an inheritance tax (Maryland, Nebraska, Kentucky, New Jersey, Pennsylvania, and Iowa), most individuals fortunately don’t need to navigate this process. If you’re in one of these states, as a beneficiary/heir to an estate, you may need to pay taxes on inherited assets and properties. However, there’s good news – if the deceased lived in one of the 44 states without an inheritance tax, you might not have any tax obligations, providing some relief during this difficult time.

Documents required to sell an inherited property

To demonstrate legal ownership and list a property for sale, you’ll need court-issued documents granting you legal authority as the executor or administrator. These documents establish your right to manage the inherited property. When ready to close with a buyer, you’ll need the deed, title insurance, or other relevant legal records to prove legal ownership of the inherited property.

Research what additional documents may be required to sell an inherited property! Some jurisdictions need additional property-related documents, including previous surveys, inspections, or other paperwork relevant to the property’s condition or history. At Starfish Group Properties, we simplify this process when you sell directly to us for cash.

Is there an easier way to sell?

Absolutely! Starfish Group Properties is a direct house buying company with a solid reputation for purchasing inherited houses for cash with minimal stress and fees. Contact us today for a competitive cash offer on your inherited property. We buy residential real estate in any condition throughout Fort Worth, Dallas, and the entire DFW Metroplex, and we specialize in navigating the complex process of selling probate properties! We can close in as little as 7 business days, making your home selling experience straightforward so you can move forward with your life.

Even if the house has major storm damage or has been neglected for years requiring extensive upgrades to be “market ready,” once you accept our fair cash offer, our team will handle all those expensive repairs so you don’t have to! We buy the ugliest houses, vacant properties, homes in pre-foreclosure, and properties involved in divorce settlements – making the sale of an inherited house simple and stress-free.