The Guide to Selling Inherited Property in Florida

Inheriting a home can be an overwhelming experience. If you’ve recently inherited a property in Florida and you’re considering selling, knowing what to expect can make the process go much more smoothly.

The following comprehensive guide is designed to cover all the most important aspects of selling inherited property in Florida so you’ll be ready to tackle anything that comes your way.

What Is Inherited Property?

The term “inherited property” refers to any asset that a deceased person passes down to their heirs or named beneficiaries. These assets can include everything from money and investments to furniture and other personal belongings to vehicles and homes.

In the state of Florida, most inheritances go through a legal process known as probate, through which a court oversees the settlement of the decedent’s estate. This typically involves making sure any outstanding debts are paid and distributing whatever assets remain to the appropriate parties.

To make selling inherited property in Florida as simple and straightforward as possible, it’s important to understand the financial and legal implications of doing so.

Steps to Take After Inheriting Property in Florida

Submit the Will

First, you’ll need to submit the will to the local court in the county where your loved one lived. In Florida, this must be done within 10 days of the person’s death. The court will then confirm that the will is valid.

Initiate the Probate Process

The probate process in Florida is initiated by filing a petition, along with the filing fee, to  the clerk of the circuit court, typically in the county in which the decedent lived at the time of their death. 

Once approved, the court will appoint an executor or personal representative who will be responsible for managing the estate. This includes identifying and valuing assets, paying any outstanding debts or taxes, and divvying up what’s left to the heirs.

In Florida, the probate process takes an average of about a year. During this time, it’s important to keep the lines of communication open and remain as organized as possible.

Conduct a Property Assessment

Once the probate process has been initiated, you’ll want to get the ball rolling on evaluating and assigning value to the asset(s) you’ve inherited. In the case of a home, it’s imperative that you obtain a professional appraisal as soon as possible. This will help determine the fair market value of the property. It will also establish the property’s tax basis, which will come into play once sold. 

Prepare the Property for Sale

You’ll also need to make a decision about whether you want to repair or renovate the property to make it more marketable, or just sell the home As-Is. Keep in mind that if you decide to fix the place up, you will also be responsible for the financial upkeep until the property is officially sold. 

For that reason, most people who inherit homes try to sell them as quickly as possible. That way they can minimize the amount of time, money, and other resources they’ll need to invest in the property. 

Legal Aspects of Selling Inherited Property in Florida

Transfer of Ownership and Title

In Florida, the designated heir or named beneficiary is required to provide proof of inheritance to have the title of the property transferred into their name. This process is typically handled during probate, when the judge declares that an owner who is not on the deed is entitled to the home. It’s essentially changing the name on the title without a sale.

Establish Homestead Status

Once the title has been transferred, the probate judge will then issue what’s known as an Order Determining Homestead Status of Real Property. This is a legal document that officially allows the inheritor to sell the property. 

Clear Property Liens

When you inherit a property, you also inherit any outstanding debt that’s associated with it. There may also be existing liens on the property. These obligations and encumbrances must be addressed before the property can be sold. 

Start by requesting a payoff statement from the mortgage lender and verify with the local records office in the county where the property is located to see if there are any unpaid property taxes or liens. 

Disclosure 

Florida law requires that sellers disclose certain information about a home’s condition. Specifically, it is mandated that all known facts materially affecting the value of the property, which are not readily observable and/or are not known to the buyer, be disclosed. Failure to do so could result in serious legal ramifications.  

A few examples of what must be disclosed before selling inherited property in Florida include:

• Condition of the property and any improvements that may have been made.
• Any and all known problems with the property’s title.
• The existence of easements.
• Any pending code enforcement actions.
• Flood risk (whether the home is in a special flood hazard area or has experienced flood damage in the past).
• The existence of any pending lawsuits.
• A specific statutory radon gas disclosure. 

Financial Implications of Selling Inherited Property in Florida

Taxes 

• Transfer Tax: A transfer tax is a fee the state government charges when real estate ownership changes. In Florida, transfer tax is typically calculated at 0.7% of the sale price.
• Property Tax: This is a local tax based on the value of the property. Like any other real estate, inherited property incurs property tax. Florida’s property tax rate varies by county, but the average is around 0.98%.
• Estate Tax: While Florida does not impose estate taxes at the state level, the federal government might, depending on whether the estate’s value exceeds the exemption limit. 
• Inheritance Tax: Only a few states impose an inheritance tax. Fortunately, Florida is not one of them.
• Capital Gains Tax: Capital gains tax is assessed when the property is sold and is calculated on the difference between the home’s value at the time of inheritance (known as the “stepped-up” basis) and the selling price.
• Depreciation Recapture Tax: If the deceased owner used the property for income-producing purposes and claimed depreciation, and then you sell the property for a profit, you may be subject to depreciation recapture tax. Depreciation recapture is taxed as ordinary income, up to a maximum rate of 25%.

Additional Expenses

• Renovations/Repairs: If you choose to fix the property up before selling, you will be responsible for the expenses associated with any and all necessary repairs and renovations.
• Ongoing Maintenance: Until the property sells, the new owner(s) must foot the bill for keeping all expenses up to date, including mortgage, property taxes, utilities, insurance, maintenance costs, etc.
• Real Estate Commissions: Real estate agents are typically paid a commission which is calculated as a percentage of the sale price. The amount may vary slightly, and could potentially be negotiated, but in Florida, it is typically around 5%. 
• Closing Costs: These costs generally cover the logistics of a home sale, such as attorneys’ fees, title insurance, recording fees, etc. Closing costs in Florida typically range between 6-9% of the sale price.

Documents Required for Selling Inherited Property in Florida

Before you can move forward with the sale, you’ll need to gather all the necessary paperwork. In Florida, this includes the following:

• Photo ID: First and foremost, you’ll need to prove your identity before you can do anything else
• Proof of Ownership: You should have received this document at the conclusion of the probate process.
• Death Certificate: Title companies, mortgage lenders, and other third parties involved in the sale may require a copy of the previous owner’s death certificate.
• Property Title Records: A clear title is required to sell an inherited home in Florida. This includes proof that the title is now in your name, and that there are no remaining liens on the property.
• Property Tax Records: You’ll also need to demonstrate proof that all outstanding property taxes have been paid and that there are no municipal or other tax liens on the property. 
• Seller Disclosure: As mentioned previously, Florida mandates that all sellers complete and submit a disclosure attesting to the condition of the property. 

Options for Selling Inherited Property in Florida

When it comes to selling an inherited home, there are several options. The most common include:

For Sale by Owner (FSBO)

You can sell your home on your own, without a real estate agent, which means no commissions. It also means you’re entirely on your own for the whole process. Here are a few specific pros and cons to consider.

Pros: 

• Cut costs by eliminating real estate commissions.
• Maintain greater control over the process.

Cons:

• Selling a home on your own can be complex and time-consuming.
• Inexperience and lack of access to resources can lead to costly delays.
• Potential tax and legal issues could arise.

Real Estate Agent

Another popular option is to hire a real estate agent. This comes with a few benefits and downsides as well.

Pros:

• Market experience and access to more available resources.
• Seasoned negotiation skills to get the best possible price.
• Accurate paperwork and documentation to ensure tax and legal compliance.

Cons:

• Commission and other fees can really add up.
• Lack of control over the process.
• Traditional home sales can be a long, drawn-out process.

Cash Buyer / Real Estate Investor

The third option is to work with a cash buyer. These types of transactions are typically much faster than traditional sales, but they do have their own advantages and disadvantages to consider.

Pros:

• No commissions and, in some cases, no closing costs.
• Quick cash sale in as little as 7 days.
• Property can be sold As-Is (no investment in repairs/renovations).

Cons:

• Sale price offered may be slightly below market. 
• Not as much room to negotiate.
• Potential for scams if not careful about choosing a reputable investor.

Challenges to Selling Inherited Property in Florida

Here are a few common issues that could potentially arise with inherited property so you can prepare for them in advance.

Multiple Beneficiaries

Often, parents leave their homes to more than one of their children, making an already complicated and emotional process harder to navigate.

Inheriting a home with multiple heirs can get especially messy if one or more of the joint owners decide they don’t want to sell or refuse to sign probate. 

In Florida, not all owners are required to agree in order to sell inherited property, but the courts may end up having to get involved, which can add to an already tense situation. Even if all owners agree to sell, deciding how and when to do so can add another layer of complexity. 

If you’re one of multiple heirs and you are at an impasse on how to move forward, enlisting the help of an experienced mediator may be the best way to reach an amicable outcome.

Title Issues

A property can only be legally sold if it has a clear title. This means ownership must have been properly transferred and there are no existing liens, pending disputes, or other encumbrances associated with it. 

Individuals who inherit property often have to resolve certain issues, such as paying outstanding debts, negotiating with creditors, and addressing liens and other legal issues. 

If you’re dealing with a particularly messy or complicated situation, a real estate attorney who is experienced in estate law can help guide you through the process. 

Poor Property Condition

Sadly, many homes that are passed down—particularly those that were previously owned by someone who was elderly or in failing health—are often in serious disrepair at the time of inheritance.

If the property you’ve inherited is in poor condition, you could be looking at tens of thousands of dollars out of pocket just to get it in sellable condition. Then there are the costs associated with maintaining the home while you’re fixing it up. For example, there may still be a mortgage, as well as other household expenses to take into consideration.

This is why many people who sell inherited property in Florida choose to work with a cash buyer. While the sale price may be slightly below market value, it’ll often even out since there are fewer out-of-pocket expenses to worry about. 

Some investors (like House Buyers of America) will even purchase the home with all the belongings still inside. This is a great option for hoarding situations. The seller simply walks away with cash in hand, and the buyer takes care of all the clean-out. 

Avoiding Probate Court in Florida

As mentioned above, most inherited properties in Florida must go through probate, which takes time and can costs money. Thankfully, there are a few ways to get around this:

• Lady Bird Deed: A Lady Bird Deed, also known as an Enhanced Life Estate Deed, is a legal document that allows the homeowner to pass their property on to their beneficiaries without going through probate. 
• Revocable Living Trust: A Living Trust allows the homeowner to maintain control over their property while they are still alive and then transfer it to their heir(s) upon death. Placing assets in a revocable living trust bypasses the probate process and directly transfers the property to the inheritor.
• Joint Ownership with Right of Survivorship: If you co-own the property, you can set up a Joint Tenants with Right of Survivorship. This is a legal arrangement through which the surviving co-owner would automatically inherit your portion of the property upon your death without going through probate.

Most of these need to be set up prior to one’s death. If you are in the process of planning your estate and are considering one of the above options to help your heirs avoid probate, we strongly suggest consulting with an experienced estate attorney and/or a qualified financial advisor.