Have you been one of the very fortunate ones who inherited a home? If you’ve made up your mind to selling a house privately in Australia, then that’s plenty of extra income for you.
There’s, of course, the option of moving to an inherited property. But most people ultimately decide to sell after inheriting. Or you can relocate to the lovely present you received and sell your current home. Either way, Zero Commission is here to help you sell a house fast while earning as much as possible from the sale.
While it’s true an inherited house is a huge addition to your assets, it also comes with responsibilities. If you decide to sell the home privately, there are good reasons why you should move into an inherited home, at least for a while. And, once you push through with the for sale by owner deal, here are 6 things to note when selling an inherited home.
Note #1: Look into tax exclusions if you’re selling a house privately
Laws vary with location. Verify before you proceed. You might be eligible for tax exclusion on sold property if you’ve lived there for a certain period. This exclusion can sometimes apply to inherited properties when you meet a certain residency requirement.
If you do need to live in the house to avail of tax exclusions, that’s good reason enough to move into the inherited property. Otherwise, you’ll have to deal with taxes on the proceeds.
The tax cost can also vary based on your civil status. Are you a single or married seller? Keep these in mind to maximize returns.
Note #2: You may take advantage of stepped-up tax standards
Worried how real estate market appreciation affects the tax placed on inherited real estate? Typically, taxes on property you own are computed based on the purchasing price. This is in addition to the value of improvements done throughout the years.
You’ll have fewer worries if you’ve inherited a real estate property and you decide to sell the house without an agent. Taxes in your area may be based on the fair market evaluation of the property at the time of the previous owner’s passing. This lifts a huge burden off your shoulders if you’re selling a house privately and the real estate involved holds decades’ worth of market value appreciation.
Note #3: Verify where and how you should report the home sale’s proceeds
Consult with a real estate solicitor in your area. Plenty of them provide free consultations.
Also, verify if you’re required to report the sale as taxable income. You can do the legwork yourself, or retain the services of a legal specialist to work out the details.
In many cases involving inherited real estate, the money you save from professional legal advice offsets the money you spend on the lawyer.
Note #4: Report the sale even if you’re exempt from any taxes
This is your due diligence. If you’ve done everything to avoid the burdens of inherited real estate, it’s likely you’re now selling a house privately as the new owner. As far as the government is concerned, this is still a reportable event. Reporting the sale is a prudent precaution to avoid future complications.
Note #5: Inheritance tax is different from real estate tax
There are nuanced variations in between the two types of tax. Tax laws can also vary per state which is why we suggest consulting a solicitor if you’ve inherited a home.
Note #6: Take note of who’s legally responsible for the property’s sale
This depends on the arrangements made with the previous owner. It may be the executor of the will, a trustee, or an offspring granted with ultimate responsibility to handle the transaction.
What’s vital is you notify the person with legal authority to execute the sale once you decide to selling a house privately and an inherited home is in question.
In some cases, the real estate is passed down to several family members. How you handle the transaction with relatives and the government will depend on what you want sorted out before the sale. Do you want to transfer the will to another family member? What if you’re the significant other and your name isn’t on the will?
These are just one of the many scenarios involving inherited property and we can’t cover them all in one blog post. A fantastic resource to check out is the website of the Australian Taxation Office.
Once the transfer of ownership and tax details have been worked out, you can move forward with selling a house privately. For a limited-time offer, we’re offering homeowners a low price of $299 and Zero Commission will list your property UNTIL SOLD on the top two real estate websites in Australia: Realestate.com.au and Domain.com.au
If your goal is to sell my house without an agent, you’re going to love our other popular blog posts:
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