When you inherit a piece of land, it’s often hard to decide what to do with it. Depending on the type of property and how it was acquired, there may be a variety of legal complexities to consider before selling. These complexities could include any outstanding debts or tax implications that come with the property.
California has a unique set of laws regarding inheritance. These laws can impact the way that inherited real estate is sold and how much profit is made when it is sold. In particular, inherited property may be subject to capital gains taxes if it increases in value after the deceased person’s death. Luckily, there are several ways to avoid paying these taxes, including using the property as a rental.
Generally, when a piece of land is transferred to a new owner, it is reassessed to reflect the market value at the time of transfer. Usually, these transfers result in a significant increase in property taxes for the new owner. In 1978, Proposition 13 was passed in California inherited land sale, limiting annual increases in property taxes for homeowners. Fortunately, the law also exempts a person’s home from reassessment if it is passed down to them through a will or other means.
This exemption, called a step-up in basis, allows children to inherit their parents’ or grandparents’ lower taxable property value when they sell their home. This can save the child a substantial amount of money on their property taxes.
However, it’s important to remember that the exemption only applies if the property is sold after the death of the original owner. Typically, inherited property is not used as a primary residence for very long before it is sold. This trend contributes to the limited inventory of homes available for sale in many areas of the state.
As such, it’s possible that the use of inheritance exemptions will result in a loss of property tax revenue in the future. This may make it even more difficult for people to buy a home in California.
Ultimately, the decision to sell a piece of California inherited land is an important one that requires careful consideration. It’s critical to understand all of the legal and financial implications that come with the property in order to make an informed decision.
The first thing to do when you want to sell an inherited piece of land is to finish the probate process. Probate is a court process that validates a will and distributes assets. Typically, it takes 6 to 9 months to complete.
Once the probate process is completed, it’s important to get a professional property inspection and appraisal before listing the home. This will help you determine its value and prepare for the real estate market. In addition, it’s important to clear all liens and debts before selling the property.
Once you’re ready to sell, consider using a flat fee MLS service like Houzeo to save on realtor fees and reach more potential buyers. With Houzeo, you can list your inherited property in the MLS within 24 to 48 hours and sell it fast for a maximum profit.