Did you recently inherit a home on the New Jersey shore but want to sell it?
This particular process involves a few extra steps, including navigating the legalities, finances, and logistics of probates and trusts. Follow this roadmap for selling an inherited shore home in New Jersey, from establishing legal rights to learning about the tax obligations of selling an inherited property.
The first (and most critical) step in selling an inherited home is to officially confirm your ability to sell the property. This means you have to go through probate, which is the legal process of authenticating a will and resolving an estate.
For inherited homes in New Jersey, you must ask a probate court to officially transfer ownership of the property to you. This process can take up to nine months to complete.
If there’s a will, then this process will involve the will's executor. However, if there isn't a will, an administrator legally responsible for managing the estate must be present.
The point of probate is to ensure assets are distributed according to estate documents or in accordance with state law. For example, according to state laws, all estate debts must be paid before the assets are transferred to new owners.
If a New Jersey probate court approves your legal ownership, you'll receive one of the following legal documents: letters of administration or a letter testamentary document. The former document is for probate cases without wills, while the latter is for estates with wills.
These documents officially prove your authority to sell the home. You'll need these documents at every step of the sale, from listing the property with a real estate agent to signing off on the final close.
Some probate cases may require court orders or affidavits of heirship to legally establish rights to sell. This issue can arise if there are multiple estate heirs. Official documents of authority prevent future legal challenges.
An inherited home may also be locked into a trust. First, learn how to find out if a trust exists since the legal process for trusts is different than probate.
Trusts have "trustees." If you hold that title, you must validate your right to sell the inherited home. You may have to distribute sales portions to named beneficiaries in the trust.
You'll need the following paperwork:
It's the trustee who signs the sale and closing agreements. This distinction is important to know for legal and tax reasons.
Look into hiring a lawyer who specializes in estates and inherited homes. Legal experts can:
You'll also need a real estate agent; however, not all agents are experienced with the nuances of inherited properties. Look for agents who also understand New Jersey's shore market.
Before listing an inherited home, you may need a time-of-death appraisal to determine the home's value at the time of inheritance. Upgrades made by the previous owner may also be used to calculate the value.
If you sell the property right after the inheritance, you can reduce your capital gains tax liability on the home. The home will have less time to appreciate.
Consult a tax professional or accountant who specializes in these matters. They can explain more about capital gains tax liability, including other potential taxes, including estate and property taxes. Look into possible exemptions available in New Jersey.
If you're a trustee selling an inherited home, the funds from the home sale will be deposited into a trust account. As the trustee, you'll distribute the proceeds to beneficiaries named in the trust.
While selling an inherited shore home in New Jersey can be a complex process, the right preparation and professionals can make a world of difference. A team of experts can help you confirm your legal right to sell, understand financial and tax implications, and sell the property at the right price with as few tax obligations as possible.
