Selling an Inherited Property in New York (2022 Updates)

On average, home sellers in New York spend nearly 9 to 12 months selling an inherited property. Median days on the market will increase significantly in the coming months due to the slowing real estate market in New York.

So, if you are ready to sell your inherited house in New York, start now!

Can I Sell an Inherited House in New York?

Yes, you can sell your inherited house in New York after the probate process is complete. Selling an inherited property is similar to selling a pre-owned home.

Here are two crucial factors that can impact your sale:

1. Probate Process

An inherited property in New York must undergo a probate process that can take 7 to 9 months to complete. The probate period varies statewide. It can extend in case of multiple inheritors or the absence of a will.

You need to submit the owner’s death certificate and property ownership proof during the probate process. You also have to pay for several expenses such as outstanding mortgages, taxes on the property, and other bills.

Properties Exempted from Undergoing Probate Process in New York

You will be exempted from a probate process under the following conditions:

• Transfer-on-Death Deeds: Transfer-on-death deeds allow the owner to transfer the ownership of the house to another person as beneficiary. The state of New York does not allow the transfer of real estate via transfer-on-death deeds.
• Receive a House in Trust in New York: A property trust is a legal entity that allows the passing of the ownership of a property from the grantor (the owner) to the beneficiary. You can inherit a house directly without probate if the owner has placed the house in a trust.

2. Mortgage on Inherited Assets in New York

The mortgage on the inherited property in New York can be paid off in one of three ways:

• You Sell Inherited Assets to Pay Off the Debt: If your inherited property in New York has outstanding debts, you can sell the inherited assets to pay off the mortgage. The profits will be shared amongst the legitimate heirs.
• You Get the Mortgage Transferred in Your Name: You can transfer the outstanding mortgage to your name along with the real estate ownership. This allows you to own the house and pay the outstanding debt simultaneously.
• The Property Will be Foreclosed: A New York mortgage lender can foreclose the property if no inheritor is ready to repay the mortgage.

👾 ALIENATION CLAUSE: This clause triggers when the ownership of an inherited property is transferred to a new heir. The inheritor now has to pay off the full mortgage. However, certain laws allow you to repay the mortgage on a monthly basis. A real estate attorney can help you with this.

Taxes on an Inherited Property in New York

You have to pay taxes while selling the property in New York as well as when inheriting it.

1. Taxes When Inheriting a Property

• Inheritance Tax in New York: Inheritance tax is a state tax applicable when you inherit property from a deceased person. However, the state of New York does not impose an inheritance tax while inheriting real property. New York inheritance tax does not apply to the spouse and children of the deceased owner. 
• Estate Tax: New York estate tax is a state tax levied upon a deceased owner’s estate before it is transferred to the heir. Also referred to as ‘Death Taxes‘, it is only imposed on estates that have a value exceeding $6.58 million. Estate taxes rates vary over a range of 3.05% to 16%, depending upon the amount above the exempted $6.58 million.

2. Taxes When Selling an Inherited Property in New York

💡 Capital Gains Tax Exclusion: You can be excluded from paying capital gains tax in New York if the following criteria are met:

1. You have lived in the property for more than two years in the last five years.
2. You have not used the exclusion in the past two years for another property.

Selling the Inherited Property in New York

After completing the probate process, you can sell your inherited property. Selling an inherited home is similar to the sale of a pre-owned house in New York.  

You must follow a certain number of steps to sell a house in New York. They typically include-

1. Hiring a Mediator: Hire a real estate agent or realtor to assist you in the home selling process.
2. Pricing Your Home for Sale: Analyse the current market trends and price your home accordingly.
3. Hiring a Photographer: Professionally photographed homes sell 32% faster. Make sure to hire among the best New York real estate photographers to create a portfolio of your house.
4. Listing Your Home on the MLS: Homes listed on the MLS sell faster and for 17% more. FSBO sellers can opt for a Flat Fee MLS service like Houzeo to list on the MLS.
5. Managing Showings: Host open houses and schedule showings to attract potential buyers for your inherited property.
6. Negotiating Offers: You must compare the offers from prospective buyers on your listing. You can also negotiate if the proposed offer is too low.
7. Closing the Sale: The closing process mainly consists of you completing the final paperwork, and paying the closing costs and home-selling taxes.

» Closing Costs in New York: Check out how much closing costs are in New York and who pays them.

Selling an Inherited House in New York with Other People

Sometimes a single property in New York might have multiple inheritors. They may include close family members like siblings, cousins, etc. In such cases, selling a house with multiple inheritors can become difficult.

Appoint a neutral party as the head person for sale. They will ensure a transparent home sale process. The head person will also guarantee a fair distribution of proceeds amongst the inheritors.

What if All Owners Don’t Agree to Sell in New York?

In such cases, the majority of inheritors can go ahead with the sale.

You can start by filing a lawsuit known as a partition action in the New York probate court. This will allow the majority of inheritors to sell the house and distribute the proceeds amongst themselves immediately after probation.

The majority of owners can also sell the house post-probation. They must file the partition action in the local court instead of the probate court.

Ways to Sell Your Inherited House in New York

You have several options to sell your inherited home in New York:

1. List Your New York Home on a For Sale By Owner Website: New York FSBO websites allow you to leverage technology in your home sale and save thousands in commissions. You retain control of your transaction and can engage directly with the buyer and buyer’s agent. FSBO sites will also get you listed fast, typically within 24 to 48 hours.
2. List with a Discount Real Estate Broker: Discount real estate brokers offer all the services that traditional Realtors do but at discounted rates. They usually charge 1.5% to 3% commissions to list your home.
3. List with a Full-Service New York Realtor: Hiring a full-service agent may not be the best alternative. They charge a hefty real estate commission of 5% to 6%. This will decrease your net proceeds significantly. However, if you need hand-holding at each step, opt for local New York realtors in your neighborhood.
4. Sell Your Home to an iBuyer in New York: An iBuyer can instantly make a cash offer and help you sell your house fast in New York. They make cash offers as high as 100% of the fair market value. However, iBuyers have strict purchase criteria.
5. Sell Your New York House to a Flipper: You can sell your inherited property to professional house flippers in New York. They extend offers as high as 70% of the fair market value.

✍️ Pro Tip: Sell Your Distressed Inherited Property to Cash Home Buyers in New York

Cash home-buying companies typically offer 50% to 70% of the property’s fair market value. They majorly deal in distressed and rental properties.

» New York Cash Home Buyers: Check out our rankings.

Bottomline

Selling an inherited house in New York is a complex and time-consuming process. Your inherited home might remain in probate for nearly 7 to 12 months. You also have to pay several taxes when selling your inherited home.

All of this adds to the complexity and expenses of selling a house. We recommend you sell with a Flat Fee MLS company to ensure a smooth sale.

A New York Flat Fee MLS company like Houzeo will get your house on the MLS right after probation. An MLS listing via Houzeo will give your house maximum exposure, and you may even attract cash offers.

Eager to Know More About Houzeo?

We’ve got you covered. Check out the following video to understand why Houzeo is one of the best for sale by owner websites in the U.S.

» NEED MORE CLARITY? Watch exclusive Houzeo reviews and learn why it is one of the best FSBO sites in America.

Frequently Asked Questions

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