The Guide to Selling Inherited Property in Georgia

The process of selling a home can be complicated under normal circumstances. Add in the legal and financial implications of inherited property, and you’ve got quite a complex situation on your hands.

Fortunately, we’ve done all the legwork for you and put together a comprehensive guide to selling inherited property in Georgia. Below, we’ll cover everything you need to know to make the process as smooth and uneventful as possible.

What is Inherited Property?

Inherited property refers to any belongings that are passed from a deceased person onto their heirs or named beneficiaries. This can cover everything from personal items that are sentimental in nature to assets of value, like cash, investments, vehicles, and real estate.

In the state of Georgia, the inheritance process typically involves probate. This is a legal proceeding through which the court ensures that all outstanding debts of the decedent are settled, and any remaining assets are distributed to the appropriate individuals or entities.

If you plan on selling a home you inherited in Georgia, it’s important to understand all that’s involved in doing so. In particular, you want to make sure you know what steps to take, and in what order. Let’s explore this in greater detail below.

What to Do When You Inherit a Home in Georgia

Initiate the Probate Process

The first step after inheriting property in Georgia is to start the probate process. This is done by filing a petition, along with the will (if one exists), with the probate court in the county in which the decedent lived.

The probate court judge will then determine the validity of the will and ensure that all relevant parties have been properly notified of the death. They will also officially name an executor who will make sure that all creditors are paid, and assets are distributed fairly.

In Georgia, the probate process can take anywhere from a year to 18 months or more, depending on the complexity of the estate and other factors. During this time, it is essential that you stay as organized as possible.

Assess the Property

Once you’ve started the probate process, the next important step is to have the property professionally appraised. This will serve two purposes: determine the current market value so you’ll know how much you can sell it for and establish your tax basis. (We’ll go into taxes in more detail later.)

Prepare the Property for Sale

Another important step is determining whether you want to sell the property in its current condition or fix it up to make it more marketable. Keep in mind that if you choose the latter, you’ll be responsible for all the expenses of any repairs or renovations you may decide to make. You’ll also be financially responsible for the property’s ongoing expenses until it sells. This may include mortgage payments, insurance, utilities, and more.

Legal Aspects of Selling Inherited Property in Georgia

Transfer of Ownership and Title

In the state of Georgia, a property cannot be legally sold until the title is officially transferred into the name of the rightful heirs or beneficiaries. This step is typically handled during the probate process.

Pay Off Mortgages and Clear Liens

Inherited property often comes with existing obligations, such as a mortgage or home equity loan. Likewise, homes often have liens placed on them, which must be cleared before the property can be sold. If the property you have inherited has any of these things, you will need to get them taken care of before you can move forward.

Disclosure

Unlike most other states, Georgia is a “caveat emptor” (buyer beware) state. This means that buyers are responsible for doing their own due diligence in real estate transactions.

That said, Georgia sellers are required by law to inform potential buyers about any latent or known material defects that would not necessarily be found during a reasonable inspection of the house. 

Material defects cover anything that poses a safety risk or that can have a significant, adverse effect on the value of the property, such as defects in any of the following:

• Foundation
• Frame
• Roof
• Windows and doors
• Electrical
• Plumbing
• HVAC system
• Major appliances

While not required by law, completing and filing a formal disclosure statement is strongly recommended.

Financial Impact of Selling Inherited Property in Georgia

Taxes

• Property Tax: In Georgia, all property is taxed at an assessment rate of 40% of its full market value. Each county then sets its own tax rate, or millage. The formula to calculate property tax is as follows:

        (Property Value x Assessment Rate) - Exemptions) x Property Tax Rate = Tax Bill

• Transfer Tax: Georgia imposes a real estate transfer tax, which is typically paid by the seller. Currently, the transfer tax rate in GA is $1 for the first $1,000 or fractional part of $1,000 and then 10 cents for each additional $100 or fractional part of $100. 
• Estate Tax: While the state of Georgia does not assess an estate tax, the federal government may, depending on whether the value of the estate exceeds the exemption limit.
• Inheritance Tax: Only a handful of states impose an inheritance tax. Thankfully, Georgia is not one of them.
• Capital Gains Tax: If the value of your inherited property increases between the date of the previous owner’s death to the date of the sale, chances are you will be required to pay capital gains taxes. Fortunately, you will only be taxed on the appreciation amount.

Other Expenses

• Repairs/Renovations: If you choose to make repairs or do any renovations to the property before selling, you will be responsible for the costs associated with those updates or upgrades.
• Ongoing Upkeep: The inheritor of a property assumes all of the ongoing expenses associated with that property until it sells, including mortgage payments, property taxes, utilities, insurance, etc.
• Real Estate Commissions: Real estate agents usually earn a commission for their work in helping to sell a home. In Georgia, the average real estate commission is 5-6% of the sale price.
• Closing Costs: Closing costs encompass all the administrative tasks associated with real estate transactions, such as attorneys’ fees, title insurance, loan origination fees, etc. In Georgia, closing costs are typically around 6.25-9% of the sale price.

Documents Required for Selling Inherited Property in Georgia

Before you can sell inherited property in Georgia, you’ll need to collect and/or prepare the following documentation:

• Photo ID: Current photo identification will be required throughout the selling process.
• Proof of Ownership: This is typically provided to the heir or beneficiary during the probate process.
• Death Certificate: Most parties involved with the sale of inherited property will require a certified copy of the death certificate.
• Property Title Records: As mentioned above, clear title is required to sell an inherited home in Georgia. This includes proof that the title has been transferred to your name, and that there are no liens, or other legal or financial obligations associated with the property.
• Property Tax Records: You may also be required to show proof that there are no municipal or other outstanding taxes associated with the home.

Options for Selling Inherited Property in Georgia

There are a few options for selling inherited property in Georgia. The three most common include:

For Sale by Owner (FSBO)

First, you can choose to sell the property on your own, without the help of a real estate professional. There are a few benefits and downsides to this option.

Pros:

• Save on real estate commissions (5-6% of the sale price)
• Maintain greater control over the process

Cons:

• Can be an overwhelming and confusing process
• Lack of experience and access to resources can put you at a disadvantage
• Risk of potential legal and/or tax issues

Real Estate Agent

Another option for selling an inherited home in GA is to work with a real estate agent. Of course, this option also comes with its own advantages and disadvantages.

Pros:

• Industry experience and access to more resources
• Negotiation skills can ensure a higher sale price
• Proper documentation to ensure tax and legal compliance

Cons:

• Commission and other fees can cut into your profits
• Lack of control
• Traditional home sales can take a long time, especially if it’s a buyer’s market

Real Estate Investor/Cash Buyer

The third option is to work with a real estate investor who is willing to purchase the property for cash. Here are a few benefits and drawbacks to consider this option.

Pros:

• No commissions and, in some cases, no closing costs
• Fast, headache-free transaction (close in as few as 7 days)
• Option to sell the property As-Is (no financial investment in repairs/renovations)

Cons:

• Offer might be slightly below market rate
• Not as much room for negotiation
• Risk of fraud if you don’t choose a reputable cash buyer

Challenges to Selling Inherited Property in Georgia

Sometimes selling inherited property isn’t as straightforward as you may hope—especially if you find yourself dealing with one or more of the following scenarios.

Multiple Heirs

It’s not uncommon for there to be more than one heir or beneficiary, especially in a situation where a parent is bequeathing their home to multiple children.

This can complicate matters in a number of ways. For instance, sometimes one or more siblings will refuse to sign probate, or decide they don’t want to sell.

Even in scenarios where all of the beneficiaries agree to sell the home, the subject of when and how to do so can open a whole new can of worms.

If you are one of multiple heirs and you are having a hard time reaching an agreement on how to move forward, your best bet will probably be to enlist the help of a mediator. This can help avoid lengthy, costly, and emotional legal proceedings.

Title Issues

As mentioned, a home cannot be legally sold in Georgia unless it has clear title. In many cases, there may be certain steps that must be taken in order to accomplish this.

For instance, if there are any liens on the property or outstanding taxes owed, these things will need to be addressed before the title can be transferred.

If you are dealing with a particularly complex situation or you’re just unsure of how to proceed, an experienced real estate attorney should be able to provide some guidance.

Property in Disrepair

Many inherited homes are in disrepair by the time they are passed on. This often occurs when the decedent was elderly or in poor health leading up to their death, and therefore unable to manage the property’s upkeep.

Making a home like this marketable can cost tens of thousands of dollars, or even more. Meanwhile, as the inheritor, you will also be on the hook for all the expenses associated with keeping the home in good standing until it’s ready for sale.

This is when working with a cash buyer can be a great option. While you may not receive top dollar for the property, you also won’t have to lay out a ton of money to fix the place up. Instead, you can simply agree to a fair price, receive a lump sum payment, and walk away.

In some cases, the property is in such bad shape that a bank won’t even extend a mortgage. A real estate investor willing to pay cash eliminates this concern, and the property can change hands As-Is, without the hassle or expense of bringing it up to code.

Avoiding Probate in Georgia

In Georgia, most inherited property must go through probate, which takes time and can be costly. Thankfully, there are a few ways to get around this:

• Living Trust: A living trust allows the homeowner, as the trustee, to maintain control over the property while they are alive and then have their named successor trustee distribute said property upon death, bypassing probate.
• Joint Ownership with Right of Survivorship (JTWROS):  Those who co-own property can establish a Joint Tenancy with Right of Survivorship (JTWROS). This arrangement ensures that the surviving owner automatically inherits the deceased owner’s share, eliminating the need for probate.
• Transfer on Death Deed (TODD). A Transfer on Death Deed allows the homeowner to transfer ownership of the property directly to someone else upon their death without having to pass through probate.
• Gift the Property: In the state of Georgia, homeowners are allowed to transfer ownership by gifting their property to someone else. It’s important to note, however, that this type of transaction involves significant tax and legal considerations, we strongly suggest seeking professional advice before proceeding.

All but one of these arrangements must be set up prior to death. If you're in the process of planning your estate and considering one of these options to help your beneficiaries avoid probate, we recommend consulting with an experienced estate attorney or a qualified financial advisor for specific guidance.