A Practical Guide to Selling an Inherited Property

Chicago, Illinois owner holding a model home of the house they inherited

Inheriting a property often comes during a time of grieving for a loved one. It’s never easy losing someone you love, and there are times when inheriting their house and everything in it can make it even harder.   

If you’ve recently inherited a property in the Chicago area, you might be stuck trying to figure out the best action to take. If you already have a home or don’t live anywhere near the property you inherited, your first thought might be to just sell it.

However, it’s almost never as easy as “just selling” an inherited property. From laws to inheritance taxes to estate taxes, there’s a lot you need to consider first. 

To help sort things out, we’ve put together a practical guide on how to sell an inherited property in the Chicago area. At the end, you’ll see the most simple solution and one that can save a lot of headaches when you’re already going through a lot of heartache. 

Deciding to Sell the Property

The absolute first thing you must do after inheriting a house in Chicago is to decide what to do with it. There are three options: move into it, rent it out, or sell it.

Each of these pathways has its benefits and disadvantages, so it’s important to weigh them while making your decision.

If you are 100% sure you don’t want to keep up with the maintenance, property taxes, and more concerning the property, then your best bet is to sell it quickly and efficiently. You don’t want to have this house looming over you while you grieve and work through this difficult time.

Steps to Sell an Inherited Property

There is a process you’ll have to go through to sell a property you inherited. However, the process may vary depending on where the property is located. Feel free to get in touch with us if you have any questions. 

Last will and testament on desk of Chicago resident with pen, gavel, model house, and cash

Step 1: Review the Will

If the person you inherited the property from left a will, this process will be much easier. The executor of the will ensures everyone receives what they are entitled to accordingly.

If there is no will in place, then any property will usually go to the next of kin. However, there may be some complications with this and arguments over rights.

Step 2: Go Through Probate

After reading and reviewing the will and determining who the property now belongs to, the property must go through probate. This will happen whether or not there is a will involved.

Probate is the analysis and official transfer of the property to the new owner. This includes a lot of paperwork and forms for identification and tax purposes. You will also have a better understanding of the assets and debts that were left behind.

Step 3: Hold an Estate Sale

Before you can sell the property, you must take some time and go through the items within the home. There may be items that you and your family want to keep for yourself. Be sure to go through everything and take what you want.

The rest you can either donate or sell in an estate or yard sale to clear out the house. Many people feel a sense of guilt for selling items that belonged to their loved ones; know that this is a normal emotion and only you can decide what’s best for your situation. 

Step 4: Renovate or Repair

If the house is in a state that needs some love and care, the time to make these repairs is after you’ve moved everything out. Cleaning and repairing an empty house is much easier and more effective. 

You may also want to renovate some parts of the house to get a better price when you sell it. But this is your choice whether or not you think it’s worth the investment. 

Step 5: Put It Up for Sale

Traditionally, many people choose to find a real estate agent to list the property for sale. This is a good choice if you aren’t in a rush to sell the property and are willing to wait for the right buyer to come along and make an offer.

However, if you are in a time crunch or are simply ready to move on from the property, you can decide to sell it for cash or put it up for auction. This will sell your home much quicker than the traditional route, but you need to find the best deal that matches your unique needs and goals. 

Step 6: Settlement

Once the inherited property has been officially sold, you will have to settle any debts left behind. You will also have to pay taxes and a possible estate tax depending on where the house is located.

It’s important to note that Illinois does not have an inheritance tax. However, you may encounter an estate tax depending on the value of the assets you inherited along with the house.

Chicago property owner stressed over selling inherited property

Obstacles When Selling an Inherited Property in Chicago

So, that’s the process when everything is simple. But, there are some obstacles that pop up that will make things a little bumpy. 

Debts and Liens

Sometimes, the property is worth less than the debt that was left behind. This is a tough situation that can leave you wondering what to do.  

Another issue is liens against the property. For example, if the owner did not pay property taxes for a few years, you cannot sell the property until these taxes are paid.

Multiple Parties Involved

One of the most common obstacles of selling inherited property is when multiple people hold ownership of it. In order to sell it, you must all agree on the decision.

Sales Tax

When people sell their home, they can usually take advantage of a tax exemption where the first $250,000 of the gains goes untaxed. This increases to $500,000 for married couples.

However, as someone who inherited the property, you will not get to take advantage of this tax because you likely did not live in the property for at least two years in the previous five years.

There is some good news, though! You may be able to sidestep or decrease the gains tax thanks to the stepped-up basis tax rule.

Selling an Inherited Property for Cash in Chicago 

Sometimes inheriting a real estate property is actually inheriting a difficult situation that you don’t want to be in. We get it. You’re already suffering and now you’ve got this house that, while full of memories, is also full of debt and worry. 

We’re here for you. Our goal is to work with you, understand your concerns, and be empathetic to your unique situation. If you have inherited property in Chicago and need someone to talk to you about your options, Homes to Harmony is here to help. 

Whether you decide to sell the inherited property quickly for cash or not, we want to offer guidance and advice to help make this time easier for you.

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