You’ve inherited a home. You want to sell it quickly. You don’t know how.
Between estate agents and lawyers – there is just too much paper work and so little time.
But what if we told you it could be different?
Selling an inherited home in Rhode Island can be both quick, easy and profitable – if one takes the right steps.
Let us guide you down the path of smart and strategic selling, and have your inherited home needs met in no time.
Key Notes
- Inherited home sellers can make use of cash home buyers, iBuyers, real estate agents and FSBO methods.
- Preparing and pricing the property correctly is key.
- Sale of inherited home includes capital gain tax of between 3.75% – 5.99%.
- All heirs must agree to sell inherited property.
1. Confirmation of Inherited Home Ownership
Legally, inherited property can only be sold once it has already transferred into their name. Transfer of ownership takes place in three ways:
Transfer on Death Deed (TOD)
A Transfer on Death Deed is a document prepared by the deceased that enables automatic transfer of ownership of a property to a chosen beneficiary on the date of death. Possession of a TOD enables the seller to avoid the probate process.
Living Trust Transfer
In situations where a home is inherited through a living trust, the designated trustee will be empowered to distribute the assets to beneficiaries, also avoiding the probate process.
Probate
Probate is the court-supervised process that governs the administration and distribution of a deceased’s estate.
Rhode Island probate law states that any property owned by the deceased at the time of their death, which does not automatically transfer through TOD or a living trust, must pass through the probate process to legally transfer ownership before any sale can occur.
To speed up the probate process for selling an inherited property, sellers would be wise to consider the following steps:
- Consult with an experienced probate attorney.
- Familiarize yourself with RI probate requirements.
- Gather essential documents, such as a death certificate and proof of ownership.
- Clear any outstanding debts and liens on the property.
- Confirm the title of the property and resolve any existing ownership disputes.
- Determine property value.
Rhode Island probate laws stipulate a minimum period of 6 months that the probate must remain open, for creditors to file any claims against the deceased’s estate.
The filing of the deceased’s estate tax returns is also required and is due no later than 9 months after the date of death.
Taking the above into account, sellers should be wary of the fact that the Rhode Island probate process typically takes between 6 to 12 months to be completed and must plan their inherited home sale timeline accordingly.
2. Explore Your Selling Options
Cash Home Buyers
Selling your inherited home to a cash home buyer in Rhode Island is a route that favors a timely and stress-free property transaction.
Cash home-buying companies are specialists in fast, convenient property sales. They purchase properties in an as-is condition, irrespective of damage or defects, foregoing the need for maintenance or repairs.
Cash home buyers also eliminate commission/agent fees, closing costs, and the taxing prospect of preparing a “show house.”
Cash home buying companies have large amounts of capital on hand and operate without the need for loans or mortgage bonds, guaranteeing you an all-cash transaction – with deals being closed in as little as 7 days.
iBuyers
iBuyers are tech-driven property firms that utilize automated valuation models and algorithms to make instant offers on listed houses.
They typically make an offer worth up to 80% of the home’s fair market value.
iBuyers charge a hefty service fee but aim to balance it with the speed and convenience they offer. They are often capable of finalizing deals within a few weeks.
Real Estate Agents
Hiring a real estate agent is a tried-and-tested option available to inherited home sellers. Agents specialize in providing market insights, setting a competitive price, and handling negotiations.
Sellers choosing the traditional route should ensure the agent has a strong track record and comprehensive local market knowledge. Their expertise can streamline the sale and quickly attract serious buyers.
For Sale By Owner (FSBO)
Sellers may enjoy the idea of taking on the challenge themselves by way of an inherited property FSBO.
Selling the property yourself offers massive profit incentives. You’ll save on iBuyers service fees and agent commissions, as well as the benefit of listing at your preferred market value.
The FSBO route can be an enjoyable experience, practically and financially, if sellers have the time to manage listings, showings, and negotiations.
Be sure to make use of platforms such as Rhode Island’s State-Wide Multiple Listing Service, in operation since 1972 and with a customer base of over 6,000 people, to reach a broad market of prospective buyers.
3. Preparing Inherited Home for a Quick Sale
Assessing the Property’s Condition
Hiring a professional to conduct a home inspection prior to listing is a necessary expense, helping you to negotiate the best possible sale price at the end of the deal.
Step one is to focus on minor fixes that will maintain or enhance the property’s value without requiring significant expenditure.
Step two is to identify essential repairs before the buyer identifies a chance to reduce the price.
Home Staging
Staging helps buyers visualize their future and the property’s overall potential.
Simple things like repainting walls and updating light fixtures will transform any living space.
Deep cleaning, decluttering, and depersonalizing are the name of the game in terms of maximizing buyer appeal.
Sellers with high-value properties can also consider using professional staging services for a refined look. Professionally staged homes sell for an average of $40,000 over the list price.
Setting the Right Price
Adopting the right pricing strategy is crucial when selling homes.
Competitive, well-placed pricing almost guarantees a quick sale. Factors to consider are current market conditions as well as recent sales of homes in the area.
The 2024 Rhode Island Housing Market conclusively favors the seller. Higher sale prices and low inventory (houses listed for sale) indicate an ideal market for sellers looking to make a quick and profitable sale. In January 2024, 42% of homes sold higher than their list price. Record-low inventory means that your inherited home is worth its weight in gold.
| Metric | March 2024 |
|---|---|
| Median Sale Price (single-family home) | $440,000 (+11,4% YoY) |
| Total Sales (single-family home) | 530 (-4,9 % YoY) |
| Number of Listings (single-family home) | 903 (-74.9% decrease since pre-pandemic) |
| Active Inventory (single-family home) | 1.7 month supply (seller’s market)
|
Source: RI Realtors
4. Rhode Island Tax Considerations
Capital Gains Tax
When selling an inherited home in Rhode Island, in addition to federal capital gains taxes, you will need to pay RI state capital gains tax on the profit made from the sale of inherited property.
This profit is based on the difference between the house’s most recent appraisal value and the house’s final selling price.
Rhode Island makes no distinction between short-term and long-term capital gains and taxes capital gains on the same tariff as ordinary income. The profit made on the sale of an inherited home is taxed according to your income tax bracket and sits at either 3.75%, 4.75%, or 5.99%.
| Taxable Income/Capital Gains | Rhode Island Capital Gains Tax Rate |
|---|---|
| $0 to $73,450 | 3.75% |
| $73,450 to $166,950 | 4.75% |
| $166,950 or more | 5.99% |
Source: Valur Library
Inheritance Tax
Inheritance Tax does not apply in Rhode Island.
However, the sale of an inherited home could be stalled during the probate process, due to unpaid federal and RI estate tax.
Estate Tax
Rhode Island has its own estate tax provisions, noteworthy to inherited homeowners.
Sellers who received an inheritance from an estate that is subject to the Rhode Island estate tax may be able to take advantage of the estate tax exemption.
For 2024, the Rhode Island estate tax exemption is $1,77 million. Simply, if the probate estate is valued at less than the given amount, your inherited property will not be subject to estate tax, speeding up the probate process.
If the probate estate exceeds $1.77 million, the estate will be liable for estate taxes ranging from 0.8% to 16%, calculated both gradually and marginally. Non-payment of estate taxes will stall the probate process.
Federal estate taxes apply, but the federal tax exemption, currently at $13.61 million, is not likely to be a consideration for most inherited homeowners. The federal estate tax rate begins at 18% and can go up to 40%, based on the marginal rate method.
Step-Up in Basis
The Step-Up rule applies to inherited property in Rhode Island.
Under this rule, the property’s value is adjusted to its fair market value at the time of the original owner’s death.
The rule exists to ease capital gains tax calculations and can offer significant savings. However, these may ultimately be offset by estate taxes in large estates.
5. Legal Considerations
Rhode Island probate laws require that, in the event of multiple inheritors, all heirs agree to the sale of the property before any sale can take place.
Failing such an agreement, the property cannot be sold, and the inheritors must go through the lengthy probate process outlined above to try to resolve the dispute under court supervision.
Clear communication between heirs is essential to avoiding conflicts and delays in estate distribution. Hold regular meetings to discuss the sale process and agree on major decisions.
If disagreements arise, consider mediation to reach a consensus. Legal professionals can assist in facilitating these discussions and ensuring all parties are fairly represented.
Frequently Asked Questions
Is now a good time to sell an inherited home in Rhode Island?
Yes. The 2024 Rhode Island housing market consists of a low inventory and high selling price trend. These are the hallmarks of a seller’s market, where prospective sellers can quickly and profitably offload inherited property as buyers struggle to find reasonably priced homes.
Can I sell a damaged inherited home in Rhode Island?
Rhode Island state law requires sellers to disclose any known defects or issues when offloading property. However, cash home buyers will agree to buy your inherited home in an as-is condition, irrespective of any damage.
Conclusion
In Rhode Island, the keys to a swift and successful inherited home sale lie in your estate navigation, home selling strategy, and industry expert knowledge.
We’ve laid out the steps to follow to choose the right option and achieve seller satisfaction.
Looking to cash in on your inherited home? We’re ready to make you an offer today, let’s talk.
