When a family member passes away, their property will be inherited by individuals who have the right to claim ownership according to the will. After inheriting a property, there are several things to consider, including probate, taxation, liens, and mortgage. Also, selling the house after clearing the legal process can be another uphill task. The following sections will highlight the essential factors to consider when selling an inherited property in Pittsburgh.
Financial Obligations on the Property
Inheriting a property in Pittsburgh is both rewarding and challenging. If the mortgage on the house is pending, the financial responsibility will be passed to you. It’s an additional burden if you want to live in the house. However, you can also sell the inherited house to a cash home buyer in Pittsburgh for a fair cash offer and foreclose the mortgage.
Tax Implications of an Inherited Property
No tax is levied when you inherit a property from someone. But you will need to pay capital gains tax when selling an inherited property. Tax on inherited property is calculated based on a stepped-up basis. The following example will help you understand the tax implications on inherited properties.
Andrew inherits a property from his father that is worth $500,000 at the time of his death. He decides to sell it later for $600,000. The profit made from the sale is $100,000. Andrew must pay capital gain tax for $100,000. But if he stays in the property for a minimum of 24 months and sells it later, he will be exempted from capital gain tax for up to $250,000.
Multiple heirs can make selling the home more complicated. You can sell it jointly, rent it out, or let one of the heirs live in it. Other issues include renovations, repair, mortgage costs, and taxes.
You can decide among yourselves and sell the property to one person and let them stay in it. If no one agrees to the first option, you can sell it to a cash home buyer in Pittsburgh for a better price and split the cash. The final option is to divide the property and own or sell it at your convenience.