On average, home sellers in Texas spend 9 to 24 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 Texas.
So, if you are ready to sell your inherited house in Texas, start now!
- Probate Process: A probate is a legal validation of a deceased person’s will that helps to distribute the property amongst its heirs and beneficiaries.
- Sale of an Inherited House in Texas: After the probate is completed, the process of selling an inherited house is the same as selling a pre-owned house in Texas.
- Selling a House with Multiple Inheritors in Texas: If the inherited property has multiple heirs, the majority can decide to sell the house by filing a lawsuit of partition action in the Texas probate court.
- Inheritance Tax: The state of Texas does not impose an inheritance tax upon the transfer of ownership.
- Bottom Line: In 2023, more sellers in Texas are opting to sell their homes by owner. By using Texas For Sale By Owner websites, you get full exposure via the MLS and save thousands in commission – negating the decline in home prices.
Can I Sell an Inherited House in Texas?
Yes, you can sell your inherited house in Texas 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 Texas must undergo a probate process that can take 3 to 6 months. 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 Texas
You will be exempted from a probate process under the following conditions:
- Texas Transfer-On-Death Deeds: Texas transfer-on-death deeds allow the owner to transfer the ownership of the house to another person as beneficiary. You can file the deed at the county’s clerk office based on the property’s location. The filing fees are $24 to $26 for the first page and $4 for each additional page.
- Receive a House in Trust in Texas: 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 Texas
The mortgage on the inherited property in Texas can be paid off in one of three ways:
- You Sell Inherited Assets to Pay Off the Debt: If your inherited property in Texas 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 Texas 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 Texas
You have to pay taxes while selling the property in Texas and not when inheriting it.
1. Inheritance Tax Texas
Inheritance tax is a state tax applicable when you inherit a property from a deceased person. However, the state of Texas does not impose an inheritance tax while inheriting real property.
👉 NOTE: Inheritance tax does not apply to the spouse and children of the deceased owner.
2. Taxes When Selling an Inherited Property in Texas
- Transfer Tax: Transfer tax is a one-time fee (generally costs less than 1%) that sellers pay at the time of transferring the ownership between the two parties. Texas does not charge a transfer tax for a home sale.
- Property Tax: Property tax varies by county, but you will pay approximately 1% of the total home sale value to the government as property tax. Texas has no state property tax.
- Capital Gains Tax: Capital gains tax is imposed only when you sell the house, and not while inheriting it. The IRS (Internal Revenue Service) authority levies the tax on a stepped-up basis. The stepped-up basis calculates the difference between the property’s present market value and the final sale price.
- 💡 Capital Gains Tax Exclusion: You can be excluded from paying capital gains tax in Texas 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 Texas
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 Texas.
You must follow a certain number of steps to sell a house in Texas. They typically include-
- Hiring a Mediator: Hire a real estate agent or realtor to assist you in the home selling process.
- Pricing Your Home for Sale: Analyse the current market trends and price your home accordingly.
- Hiring a Photographer: Professionally photographed homes sell 32% faster. Make sure to hire among the best Texas real estate photographer to create a portfolio of your house.
- 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.
- Managing Showings: Host open houses and schedule showings to attract potential buyers for your inherited property.
- Negotiating Offers: You must compare the offers from prospective buyers on your listing. You can also negotiate if the proposed offer is too low.
- 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 Texas: Check out how much closing costs are in Texas and who pays them.
Selling Inherited Property in Texas with Other People
Sometimes a single property in Texas 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 Texas?
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 Texas 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 Texas
You have 4 options to sell your inherited home in Texas:
- List Your Texas Home on a For Sale By Owner Website: Texas 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.
- List with a Texas Discount Real Estate Broker: The best discount real estate brokers in Texas offer all the services that traditional Realtors do but at discounted rates. They usually charge 1.5% to 3% commissions to list your home.
- List with a Full-Service Texas 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 Texas realtors in your neighborhood.
- Sell Your Home to an iBuyer in Texas: An iBuyer can instantly make a cash offer and help you sell your house fast in Texas. They make cash offers as high as 100% of the fair market value. However, iBuyers have strict purchase criteria.
✍️ Pro Tip: Sell Your Distressed Inherited Property to Cash Home Buyers in Texas
Cash home-buying companies typically offer 50% to 70% of the property’s fair market value. They majorly deal in distressed and rental properties.
» Texas Cash Home Buyers: Check out our rankings.
Selling an inherited house in Texas is a complex and time-consuming process. Your inherited home might remain in probate for up to 6 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 Texas 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.
#1 Flat Fee MLS Service
Houzeo offers 4 Flat Fee MLS packages.
- Bronze Package – FREE: This package offers Houzeo listing only for 6 months with maximum photos. You pay a $49 refundable fee for a yard sign and receive your refund after sending a selfie with it.
- Silver Package – $349+: This includes everything that home sellers typically look for.
- Gold Package – $399+: It is Houzeo’s signature MLS package and includes all the technology Houzeo is known for Houzeo Showings, Houzeo Offers, and DigiTransact.
- Platinum – $999+: It includes the assistance of a licensed broker to help you with negotiations, disclosures, and closing.
👉 Our Take: We recommend the GOLD plan. You’ll have all the access to Houzeo tech, making managing showings and offer negotiations easy!
» Houzeo Reviews: Houzeo is 100% online. You can finish listing formalities in less than 60 mins.
Houzeo is America’s #1 Flat Fee MLS service because of 4 reasons:
- Max Exposure: Houzeo MLS packages give you access to the MLS, Zillow, Trulia, Realtor.com, Redfin, and 100s of other websites.
- 5-star Customer Service: Houzeo has a fully staffed customer service desk available 6 days a week. Chats and emails are open 7 days a week. This is rare in today’s world.
- 100% Online: Houzeo is high-tech. For you, this means easy listing, fast changes, online showings, and online offers. Houzeo Mobile App is also very powerful.
- No Listing Commission: In most states, you’ll be paying just a small flat fee to list on MLS. Houzeo covers 47 states + DC!. And remember, all fees are disclosed upfront, so there are no Houzeo hidden fees.
There are no dealbreakers with Houzeo.
» Houzeo Reviews: Houzeo is rated “Excellent” with a 4.9 out of 5 star rating by 4,521 home sellers on Google Reviews and Trustpilot!
Houzeo is rated 4.9 out of 5 stars by thousands of home sellers on Google & Trustpilot.
» Houzeo Reviews: Check out how Team Houzeo has addressed all Houzeo complaints from home sellers.
» NEED MORE CLARITY? Watch exclusive Houzeo reviews and learn why it is one of the best FSBO sites in America.
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Frequently Asked Questions
Do all heirs have to agree to sell the inherited property in Texas?
No. You along with the majority can sell the inherited property if you want to. You just have to file a lawsuit of partition action in the probate court.
Does Texas have an inheritance tax?
The state of Texas does not impose an inheritance tax when you inherit a property.
Is there a time limit on selling inherited property in Texas?
No, there is no time limit to sell an inherited property in Texas. Once the probate process is completed and the legal inheritor is declared, you can sell your inherited property anytime.
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