Inheriting a house often arrives with a swirl of emotions. Amid the grief and reflection following a loved one’s passing, you may also face a whirlwind of decisions involving legal processes, tax implications, property upkeep, and shared responsibilities with other heirs.
Selling an inherited house can feel like a complex process, but with a clear roadmap, it becomes much more manageable.
In this guide, you’ll learn:
Immediate First Steps
How to secure the property and handle initial legal and emotional tasks
The Probate Process
What probate is, when it’s required, and your options for selling during or after it
Tax Implications
How to use the “stepped-up basis” to minimize or avoid capital gains taxes
Navigating Co-Heirs
Strategies for managing disagreements and shared responsibilities with siblings
Preparing for Sale
How to decide between selling “as-is” or making repairs to maximize value
Step 1: Take a Breath and Secure the Inherited Property Immediately
Inheriting a house isn’t just a legal or financial event—it’s an emotional one. Before diving into probate paperwork, capital gains taxes, or deciding how to sell, take a moment.
The process of selling an inherited house can wait—what can’t wait is ensuring the property is protected and that you’re mentally and emotionally grounded.
Secure the Inherited Property Right Away
Before diving into probate paperwork or capital gains taxes, take a moment. Ensuring the property is protected is the first critical step.
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Change the Locks
If caregivers, renters, or extended family had keys, replace the locks immediately to secure the property.
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Forward the Mail
Redirect mail to your address to prevent theft and protect sensitive financial documents. An overflowing mailbox is a clear sign that a home is vacant.
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Maintain Utilities & Insurance
Keep utilities on to prevent damage like frozen pipes. Crucially, notify the insurer that the home is vacant. Standard policies often lapse after 30-60 days of vacancy, so you will likely need to secure a specific vacant home insurance policy.
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Locate the Will & Identify the Executor
Find the will to identify the executor (or personal representative) who has the legal authority to manage the estate. If there is no will, a probate court will appoint an administrator.
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Speak with a Probate Attorney
Legal guidance is invaluable. An attorney can clarify your role, explain local probate laws, identify debts or liens, and help coordinate decisions with co-heirs.
Locate the Will and Identify the Personal Representative
Understanding who has legal authority over the estate is essential. Find the will and determine the named executor (also called the personal representative). This person is responsible for handling everything from property taxes to arranging an estate sale or hiring a real estate agent.
No Will? If there’s no will, a probate court will appoint an administrator—usually the closest next of kin.
Multiple Heirs? If several family members inherited the property, expect to make decisions collaboratively, unless one is named as the sole owner or executor.
Speak with a Probate or Real Estate Attorney
Legal guidance is invaluable, especially early on. A probate or real estate attorney can help simplify complex issues such as:
- Clarifying your role as an heir, new owner, or executor.
- Understanding local probate laws and procedures.
- Identifying outstanding debts, liens, or legal issues tied to the property.
- Coordinating responsibilities with siblings or co-owners.
- Determining if legal action is needed to resolve disputes.
An attorney can also explain how to prepare for future steps like avoiding capital gains taxes or ensuring the home was properly appraised at the original owner’s death.
Step 2: Understand the Probate Process
Probate can sound intimidating, especially when you’re grieving and trying to figure out your next steps. But at its core, probate is simply the legal process that transfers ownership of the inherited property to you and other heirs.
What Is Probate?
Probate is the formal, court-supervised legal process of settling a deceased person’s estate. It includes validating the will, paying off debts and taxes, and officially transferring legal ownership of the inherited property to the rightful heirs. A house cannot be legally sold by the heirs until the probate process is complete or a court grants permission.
Do You Have to Go Through Probate to Sell?
Not always. You may be able to avoid probate if:
- The home was held in a revocable living trust.
- It was owned jointly with right of survivorship.
- A transfer-on-death (TOD) deed was in place.
- The estate qualifies as a small estate under your state’s laws (which vary by state, with thresholds ranging from a few thousand dollars to over $200,000 in some cases)
Otherwise, probate is generally required before you can list or transfer the inherited property.
Selling During vs. After Probate
Understanding when to sell can make a big difference in timeline and complexity.
Option 1: Selling During Probate
You can sell a home during probate, but it involves more oversight.
- Court approval is often required
- May include a certified property appraised value
- Sale may require public notice and competitive bidding
- Timeline is longer, but legally sound
Option 2: Selling After Probate Is Complete
Waiting until probate ends offers more freedom but also more delay.
- Fewer court restrictions
- Easier coordination with heirs
- More flexible sale options
- May take several months or even over a year
If you’re uncertain, a probate attorney can walk you through which option works best based on your state’s laws and the specifics of your inherited land or home.
Step 3: Understand Capital Gains Taxes and the Stepped-Up Basis
When you inherit a home, its cost basis (used to calculate capital gains) is “stepped up” to the fair market value at the time of the original owner’s death. This means you’re not taxed on the increase in value that occurred during the original owner’s lifetime.
What Is the Stepped-Up Basis?
What Is the “Stepped-Up Basis”?
This is one of the most significant financial advantages for heirs. The “cost basis” of the inherited property is “stepped up” to its fair market value on the date of the original owner’s death. This means you are only taxed on the increase in value from the moment you inherit it, not on the appreciation that occurred during the decedent’s lifetime.
When you inherit a property, its tax basis —the value used to calculate taxable gains—is “stepped up” to its fair market value (FMV) at the decedent’s death. This means you’re not taxed on the increase in value that occurred during the original owner’s lifetime.
Simple Example:
Let’s say your father bought a house for $60,000. When he passed away, the home was worth $320,000, according to a professional death appraisal. If you sell it for $330,000, here’s what happens:
- Stepped-up basis = $320,000
- Sale price = $330,000
- Taxable gain = $10,000
So you don’t owe capital gains taxes on the $260,000 the house appreciated during your father’s lifetime. You’ll only pay taxes on the $10,000 gain since the date of his passing—if you owe any at all.
How to Minimize or Avoid Capital Gains Taxes
There are smart, legal strategies to reduce your taxable income when selling:
- Use a qualified appraiser for an accurate death appraisal.
- Convert the home to your primary residence and live in it for 2+ years to qualify for the $250K ($500K for married couples) home sale exclusion.
- Track any improvements to adjust the property’s tax basis.
- Consult a tax professional before filing your tax return.
Can Gifting the Property Help?
Gifting inherited property can shift the tax liability to someone in a lower tax bracket, but it doesn’t eliminate capital gains. Be sure to consider this carefully with a tax advisor.
Step 4: Navigating Co-Ownership, Sibling Disputes, and Legal Tension
Inheriting property with others—especially siblings—can quickly become emotional and complex. Whether it’s about who gets to live in the home, how to divide rental income, or when to sell, disagreements are common.
If you inherit a property with one or more siblings or co-owners, everyone must agree on major decisions. The property can’t be sold unless all heirs are on the same page. The block below outlines the most common conflicts and their direct legal or financial solutions.
Common Challenges vs. Proven Solutions
Common Challenges with Co-Heirs
One sibling wants to live in the home while others want the cash proceeds. Ownership Conflict
Heirs can’t agree on a listing price or what offer to accept. Pricing Disputes
One heir handles all the maintenance and bills, leading to resentment. Unfair Burden
No one will agree on anything, and the property languishes. Total Impasse
Proven Solutions to Prevent Conflict
The heir who wants the home can obtain financing to buy out the others’ shares. Fair Resolution
Hire a certified appraiser to set a definitive, unbiased value for the property. Objective Pricing
Fund an account with contributions from all heirs to pay for utilities and repairs. Shared Responsibility
As a last resort, a court can legally force the sale and divide proceeds fairly. Legal Resolution
An estate account also helps manage shared expenses like utility bills, mortgage payments, or repairs until the inherited house is sold. It keeps finances clean and avoids mixing personal funds with estate-related costs.
Step 5: Prepare the Home for a Successful Sale
Once the legal and financial groundwork is in place, it’s time to shift focus to the home itself. Whether the inherited home is in pristine condition or needs a little love, the right preparation can make a big difference in attracting buyers—and boosting the final sale price.
Should You Sell As-Is or Make Repairs?
This depends on your timeline, budget, and the condition of the inherited property.
Pros of Selling As-Is
- Faster sale with fewer upfront costs, appealing particularly to investors or cash buyers.
- Easier if the home needs significant updates, as you avoid the burden of renovations.
- Often chosen by heirs who prioritize speed and convenience over maximizing profit.
Pros of Making Repairs
- Increases the final sale price and expands the pool of potential buyers to include traditional homebuyers.
- May reduce time on the market by making the home more appealing and move-in ready.
- According to a Q1 2025 report, properties sold “as is” typically fetch 20-30% less than comparable move-in-ready homes.
Consider a pre-listing inspection to help identify issues and guide decisions on which repairs (if any) are worth it.
Staging and Marketing the Home
Even a modest home can shine with the right presentation.
- Clean thoroughly or hire professionals.
- Declutter and remove personal belongings.
- Stage key rooms to help buyers visualize living there.
- Hire a real estate agent who understands the inherited assets market.
A good agent will also help with pricing the home appropriately, marketing it effectively, and negotiating a successful sale on your behalf.
Don’t Forget the Paperwork
Before listing, make sure these documents are ready:
- Copy of the decedent’s estate paperwork (will, letters of administration, etc.)
- Death certificate
- Proof of ownership (title or deed)
- Estate tax return (if applicable)
- Any mortgage statements or liens
- Property tax documents
Keeping this paperwork organized will help your agent, attorney, and accountant coordinate the sale smoothly.
Frequently Asked Questions About Selling Inherited Property and Capital Gains Taxes
When selling an inherited home, you’ll typically benefit from a stepped-up cost basis. This means the property’s value is adjusted to its fair market value at the previous owner’s death, not the original purchase price. By using this updated basis, you may reduce or even eliminate any capital gains when selling.
If the selling price increases significantly after inheritance, you might owe taxes on that appreciation. To limit this:
- Sell soon after inheriting to minimize post-inheritance gains.
- Live in the home as your primary residence for two or more years—you may qualify for a capital gains exclusion.
- Keep the property as a rental if you want to generate rental income while deferring a sale.
- Consult a tax advisor to determine how best to handle capital gains taxes based on your specific situation.
The IRS generally considers the cost basis of inherited property to be its fair market value on the alternate valuation date, which is typically the date of the previous owner’s death. This step-up in basis helps reduce the taxable income from a later sale.
- You’ll only pay capital gains taxes on any appreciation from the date you inherited the property to the date you sell.
- Large estates may be subject to estate tax if the total value exceeds $13.6 million in 2024.
- If the estate is over the threshold, an estate plan and tax return filing may be required.
Understanding these rules helps ensure you’re on the same page with IRS guidelines before moving forward with a sale.
Selling an inherited house involves several key steps:
- Get the property appraised to establish fair market value for tax purposes.
- Confirm legal ownership, especially if you co own with others.
- Clear title through probate, unless the property was held in a trust or joint tenancy.
- Agree on a plan with co-heirs to divide proceeds.
Some families opt for an estate sale to liquidate items before selling. If the property is in poor condition or the heirs prefer speed, selling to a cash buyer can simplify the process.
Only under specific conditions. If the inherited home was placed in a trust, transferred via a transfer-on-death (TOD) deed, or held in joint tenancy, it can often be sold without probate.
However, if none of these apply, the house becomes part of the inherited estate and generally requires court approval before it can be sold. A probate attorney can guide you on whether your case qualifies for exemption.
When multiple people co own a property, disagreements are common—especially with inherited land or homes. If one or more heirs don’t want to sell:
- Propose a buyout where one heir purchases the others’ shares.
- Try mediation to find a mutually acceptable solution.
- File a partition action in court to force a sale and divide proceeds.
These actions can be essential when you’re dealing with shared property and can’t reach a voluntary agreement.
Selling to a cash buyer can offer practical benefits, especially in the real estate industry where speed and simplicity matter:
Skip repairs or staging—properties are sold “as-is.”
Faster closings—ideal when you want to resolve the inherited estate quickly.
Fewer conflicts with multiple heirs or when siblings force a quick sale.
No agent commissions, which can help maximize your selling price.
Cash buyers often provide a straightforward path for those looking to settle estates efficiently.
Inherited a Home? Simplify the Next Step.
Settle the estate simply • No commissions • No repairs
