Selling an Inherited Home: A Practical Guide for Heirs

Probate, in the time it takes to read this section

Probate is the court-supervised process of validating a will, paying the deceased person’s debts, and transferring the remaining assets to the named heirs. The process takes anywhere from three months to two years, depending on the state, the complexity of the estate, and whether the will is contested.

A home cannot typically be sold to an outside buyer until the executor (named in the will) or administrator (appointed by the court if there is no will) has been formally granted authority by the probate court. That authority comes in the form of a document — Letters Testamentary in most states — which the title company will require before recording any sale.

If multiple heirs jointly inherit the home, the sale requires the consent of all of them. This is usually straightforward when the heirs agree and a logistical project when they do not.

The stepped-up cost basis is the most important number

Under U.S. tax law, when an heir inherits a home, the cost basis of that home for capital gains purposes is "stepped up" to the home’s fair market value on the date of the previous owner’s death. This is a substantial benefit. A home purchased for $80,000 in 1985 and inherited at a value of $400,000 is taxed, if sold soon after, on capital gains measured against $400,000 — not $80,000.

Practically, this means most heirs who sell the inherited home within a year or two pay little or no capital gains tax on the sale. An appraisal at the date of death is the documentation that supports this — and it is well worth the few hundred dollars it costs to obtain one. Consult a tax professional for your specific situation.

What to do with everything inside

For most heirs, the contents of the home are the harder problem than the home itself. There are usually three types of objects: things heirs want to keep, things that have meaningful resale value, and things that need to be hauled away.

For the third category, an estate liquidator or simple junk-removal service can clear a house in a day or two for $500 to $3,000 depending on the volume. A cash buyer who buys homes as-is — including with contents in place — eliminates this step entirely; the buyer handles the cleanout after closing.

Selling from another state

Most states allow real estate to be sold by heirs who live elsewhere, with closing documents executed via notary, mail, or remote online notarization (RON). In our experience, an out-of-state heir who has Letters Testamentary in hand can close a sale without ever flying back to the property.

The administrative chain is: a local title company prepares the documents, the executor signs them in front of a notary near where they live, the documents are returned, and the closing is recorded in the county where the property sits. Funds are wired to the executor’s designated account on the closing date.