Real Estate

A Comprehensive Guide to Selling an Inherited Home

By Meela Imperato
selling inherited home

When you inherit money, property, or other valuables from a loved one, you stand to benefit financially. 

A property inheritance can be a life-changing event and might provide significant financial benefits, depending on how you handle it. However, if you’d prefer to avoid the costs of its upkeep, you might want to sell it—and fast.

If you’ve decided that selling your inherited property is the right move, you’ve come to the right place. This handy guide will walk you through everything you need to know so that you can make an informed decision about how to sell an inherited house.

Can You Sell a Home You Inherited?

First, you may be wondering wait, can I sell inherited property or should I sell my inherited house? The answer is yes, provided there aren’t any hang-ups, such as:

  • Liens on the title – Any money owed follows the property to its new owner—you. If there are any existing liens on the title, you won’t be able to sell the property until the liens have been settled. Liens might result from unpaid property taxes, contractors, or other situations. You can do a title search on the inherited property to check for liens, typically through the county clerk’s office.
  • Conflict between heirs– If you’re the sole heir, you don’t have to worry about what others might want to do with the inherited real estate. However, if you inherited a home with siblings or heirs, everyone will need to agree before the house can be sold. Sometimes a family member or one of the heirs may have a strong attachment to the inherited real estate and might be reluctant to sell it. This can lead to some stressful family situations. In the case that you want to keep it, you can learn how to refinance an inherited property to buy out heirs.
  • Cost of necessary repairs – At other times, a home may have fallen into disrepair or might need significant work before it can be sold. If you can’t afford to pay the upfront cost of these repairs, you might need to consider alternatives or sell the house at a greatly reduced price.
  • More money owed than the home’s value –If you’ve inherited a house with no mortgage, then the process would be much more straightforward. But what happens if you inherit a house with a mortgage? Sometimes a home has been refinanced several times and the amount owed is more than the real property’s current value. If the remaining mortgage is more than the current value of the home, you might need to consider a short sale to settle the debt and unload the property.
  • A reverse mortgage – Finally, if the property has a reverse mortgage against it, you won’t be able to simply sell the home.1 Instead, you’ll need to have the title cleared and transferred into your name. You may face some significant financial consequences as you’ll have to repay the reverse mortgage or walk away from the home and allow the lender to keep the property as payment.

If you can clear the ownership and title hurdles of an inherited property, there are other financial implications you’ll have to consider.

Inherited Home Sale Taxes

Selling an inherited house may come with some financial benefits, but it also can come with taxes. There are three types of taxes you might have to pay on inherited property, including:

  • Inheritance tax – The United States doesn’t have a federal inheritance tax. Only six states require heirs to pay an inheritance tax: Iowa, Maryland, Kentucky, New Jersey, Nebraska, and Pennsylvania.2 You’ll be responsible for paying inheritance tax in these states in certain situations before you sell the property.
  • Property tax – Whether or not you decide to sell, you’ll need to pay the property taxes on the home. If you do sell, you might have to pay prorated property taxes as a part of your closing costs. 
  • Capital gains tax – Finally, if you sell an inherited property, you may be responsible for paying a capital gains tax in certain situations. The amount of tax you have to pay depends on the value of the property, when you sell it, and how much you sell the home for.

Are the Proceeds from an Inherited Home Taxable?

There are a few criteria that determine if and how much capital gains tax you must pay when you sell an inherited home. These include:3

  • The value of the property – When a property is inherited, the value is immediately assessed at the current fair market value. This means if you inherit a home that your parents paid $100,000 for many years ago and the current assessed value is $400,000, the current fair market value will be used for capital gains tax purposes. This is beneficial because it can protect you from a huge tax hit if you sell the home. (Why? If you sold a property with an assessed value of $100,000 for $400,000, you’d be paying taxes on $300,000 of capital gains.)
  • How much you sell the home for – Let’s say you sell that same property for $450,000. Your capital gain would be the difference between what you sold the home for and the assessed value—in this case, $50,000. You would pay taxes only on the $50,000 difference between the value and sales price. Conversely, if you sell the home for less than the assessed value—say, in an as-is sale—you likely won’t have to pay capital gains taxes at all.
  • When you sell the home – Perhaps you decide to make the home your primary residence for a few years and then sell it. As long as you’ve lived in the house for at least two years, you would only pay capital gains on a profit of more than $250,000 if you’re single or $500,000 if you’re married.

As you can see, the amount of capital gains tax you might have to pay varies depending on the situation.

How to Sell an Inherited Home

When selling your inherited home, you want to maximize the property’s value and ensure it’s ready to sell without restrictions. To that end, you should take appropriate steps when selling the property. 

To begin:

  1. Wait for the property to go through probate – Before you can make any moves with an inherited home, it must go through probate—the process of proving that the deceased’s will was valid. This can take a little time, so you’ll need to be patient.
  1. Ensure that the home has a clean title – After probate, you should make sure that the property has a clean title. This means no outstanding liens or debts are attached to the home. If there are any, you’ll need to resolve the debt before you’ll be able to list the home on the market. 
  1. Get the property assessed – Enlist the services of a qualified appraiser to have the property’s value assessed. This helps you understand the potential capital gains taxes, the appropriate listing price, and the amount you might profit. The property will likely be worth significantly more than it was when the person who left it to you purchased it, and you don’t want to miss out on either proceeds or tax savings.
  1. Clean out the deceased’s belongings – Cleaning out the home of a loved one who has passed away can be quite difficult and emotional. Although you can’t keep everything, the opportunity to select a few special pieces can be cathartic. You can also hold a yard or estate sale if there are many possessions to dispose of. Once the home is empty, it’ll be much easier to see what repairs might be needed.
  1. Make necessary repairs – You might have to invest in repairs on the property before you can sell it. Major electrical, structural, or other issues might have to be addressed before a home can pass an inspection. Cosmetic upgrades, such as paint or flooring, can enhance the value and increase the sales price for little cost to you. If you’re not able to afford these repairs, you can also consider selling the home “as-is.” You may be wondering, “How much do you lose selling a house as is?” While you could lose a significant amount, there’s times where it could be your best option as mentioned above.

Once you’ve done these things, you’re probably ready to put the home on the market.

Potential Roadblocks to Consider

Even if you follow the steps for selling an inherited property carefully, you may still run into some pesky roadblocks. These may include:

  • An unpredictable real estate market
  • Unexpected problems in the home that needs repair
  • High closing costs
  • Buyers who get cold feet and back out of the sale

These problems can leave you responsible for the upkeep, utility, and tax bills until the house sells. If the home has an existing mortgage, you’ll also be responsible for keeping up those payments.

The Easiest Way to Sell an Inherited Home

If this applies to you, yet you don’t want to go through the hassle of putting the house on the market, there may be an alternative. 

Selling an inherited property presents numerous hurdles and often requires funds you simply don’t have access to. The real estate market is unpredictable and closing costs can add up quickly. When co-inheritors are involved, the process becomes even more complicated.

Instead of worrying about these problems, consider a residential sale-leaseback. A sale-leaseback can help you convert the equity in the inherited asset to cash and free you from the burden of an existing mortgage. Learn more about sale-leaseback solutions today.


  1. Forbes. How Heirs Should Handle a Reverse Mortgage After Death.
  2. AARP. States with Estate and Inheritance Taxes.
  3. Gifts and Inheritances.
Written by Meela Imperato
Senior Director of Brand and Content, Real Estate & Finance Journalist

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.