The Definitive Guide to Inheriting a House with Siblings

When you inherit a house with siblings, your next steps depend on the estate plan and how the title will be held. Common routes include holding joint ownership, executing a buy-out agreement, selling and splitting the proceeds, or filing a partition action to force a sale. Understanding these options, how lender and tax rules apply, and communicating early can prevent conflict and help you resolve shared inheritance efficiently.

Inheriting a Property with Siblings: What to Do First

The first step after inheriting a house with your brother(s) or sister(s) is to try and get everyone on the same page, if at all possible. Schedule a time to meet, either in person or virtually, to discuss the situation and go over your options.

In a perfect world, all siblings will want the same thing, whether it’s to sell the home, keep it, or rent it out.

In reality, this is often not the case. Things can become especially complicated with more siblings involved. One may want to sell, while another might feel too emotionally attached to let the property go. Still, another may wish to use the home as an investment property.

Open a dialogue and ask everyone how they feel and what their wishes are. 

Logistics and Questions to Ask

Before determining what you want to do with the property you’ve jointly inherited, there are a few logistical items to take care of, as well as initial questions to ask.

First, you’ll want to make sure the property is secure. Then you’ll want to get it appraised. You should do this as soon as possible, because the tax basis (covered below) will be determined by the property’s value on the date of the former owner’s death. 

Once these two things are taken care of, the next step is answering the following questions:

• Does the inherited home have a mortgage? 
• What are the other expenses of the home (e.g. monthly utilities, insurance, property taxes)?
• Who will be responsible for paying those expenses?
• If selling the home, what repairs will need to be made first?
• Who will be responsible for scheduling/coordinating/overseeing these repairs?
• Are there any liens or back taxes due on the property?

Schedule a time to discuss these fundamental questions with your siblings and start working through any areas of disagreement. 

If possible, we strongly recommend formalizing an operating agreement as soon as possible outlining each sibling’s rights and responsibilities.

How to Divide Inherited Property

Property ownership among siblings is typically divided into the following two categories:

• Joint Tenants
• Tenants in Common

We’ve broken down the key differences between each ownership type in the chart below.

How is Inherited Property Divided Between Joint Tenants?

With a joint tenancy agreement, all siblings own equal shares of the inherited property. If the property is sold, all co-owners would split the proceeds evenly. 

If you decide to retain the property and one sibling passes away, their share of ownership will automatically be transferred to remaining co-owners. This is known as the “right of survivorship.” 

How is Inherited Property Divided Between Tenants in Common?

With a “tenants in common” arrangement, each sibling owns a specified percentage of the inherited property. This percentage is typically defined in the will, and can vary, depending on a number of unique factors.

If tenants in common decide to sell the home, the proceeds from the sale would be paid out according to each owner’s share. So, if it’s a 25/25/50 split amongst three siblings, then one sibling would receive half the proceeds, and the other two would split the rest 50/50.

Should you decide to hold onto the property, the ownership share of each sibling would be passed on to their own heirs upon their death, in accordance with their will.  

What are the Options for Inherited Property 

There are several options to consider when inheriting a home with multiple beneficiaries:

• Sell the Property
  • Pros: Quick and easy resolution and distribution of proceeds
  • Cons: Loss of family home; potential emotional attachment
• Buy Out Sibling Shares
  • Pros: Retain family property; less conflict as one sibling assumes full ownership
  • Cons: Difficult to negotiate; financial complications
• Co-Own and Live There
  • Pros: Retain family property
  • Cons: Requires cohesive decision-making; variety of potential conflicts
• Co-Own and Share Usage
  • Pros: Retain family property; use as potential vacation home
  • Cons: Requires cohesive decision-making; variety of potential conflicts
• Co-Own and Rent Out
  • Pros: Shared rights and responsibilities; rental income
  • Cons: Requires cohesive decision-making; variety of potential conflicts

Keeping Inherited Property: What to Consider

If you’re leaning towards keeping the home you’ve inherited, whether as a primary residence, a vacation home, or a rental property, it’s essential to gain a clear understanding of the costs associated with doing so. 

For instance, you’ll need to think about and plan for expenses such as:

• Mortgage
• Monthly Utilities
• Insurance 
• Property Taxes
• Maintenance and Upkeep
• Repairs
• Necessary Updates or Renovations
• Property Management Services (if applicable)

You’ll also need to make sure everyone is on the same page in terms of who will be handling which tasks. For example, who will make sure the bills are paid, and who will handle issues that arise at the property.

Again, having a formal agreement ahead of time can help avoid any misunderstandings or further conflict down the road.

Common Issues That Arise with Jointly Inherited Property

Inheriting a property with multiple beneficiaries can be complicated. Understanding the potential problems that may arise can help you plan ahead and hopefully avoid them. 

Here are a few issues you and your siblings may disagree about:

• Maintenance and Repairs – Co-owners often disagree about who will be responsible for keeping the home in good condition, including ongoing maintenance of the property and any repairs that may be necessary. 
• Financial Responsibilities – Siblings may also have conflicting opinions on who should be on the hook for paying for the home’s expenses, including mortgage payments, taxes, utilities, etc.
• Remaining Belongings – Disputes often arise over items left behind by the deceased, some of which may be valuable, others of which are more sentimental. One sibling may prefer to sell, donate, or toss everything, while another might have an emotional attachment. Or siblings might quibble over who gets to keep what.
• Usage and Access – Another point of contention might be who will be allowed to live in, use, and/or access the property. This especially comes into play with a vacation home.
• Rental Income Allocation – If you choose to keep the property and rent it out, there may be a dispute about what percentage of the rental income each sibling is entitled to. For instance, a point of contention might arise if one sibling does more to manage the property.
• Optional Improvements, Upgrades, and Renovations – While all the heirs may agree on maintenance and upkeep costs, problems could arise when it comes to optional expenses. This typically occurs when one sibling lives in the home.

What Are the Tax Implications of Inheriting a Home with Siblings?

The type of taxes you and your siblings may end up paying will depend on what you decide to do with the property. If you keep it, then you may only end up paying inheritance taxes, which are only applicable in certain states.

If you decide to sell the property, you may be subject to capital gains taxes, which are assessed at the federal level, and also at the state level in some cases. 

While there are certainly other factors to consider, the amount you will owe in capital gains will depend on how much the property has increased in value between the date of the deceased owner’s death and the date of the sale. This is known as “stepped-up” basis.

In the case where there are multiple co-owners of an inherited property and that property is sold, any capital gains taxes due would be divided among all the heirs based on their ownership share.    

What if One Sibling Won’t Sign Probate

To close the estate and officially transfer the property’s ownership, all beneficiaries must sign the probate documents. But what if one or more of your siblings is refusing to do so? 

Ideally, you’ll want to try and negotiate with the sibling who is holding out and hopefully reach an agreement. Otherwise, you could be looking at additional costly delays.

For instance, if you can’t convince the sibling who is refusing to leave, you may have to take legal action and allow a judge to decide what to do with the property. Not only is litigation expensive and time-consuming, but it can cause irreparable damage to your relationships with your siblings.

Your best bet is to try and get to the bottom of why your sibling may be resisting. Start by having a conversation. Hear each other out and see if there’s any way to reach a compromise without having to get the courts involved.

Here are some about how to handle a sibling who refuses to sign.

What if One Sibling is Living in the Home?

In some cases, one of your siblings may be residing in the home you’ve jointly inherited. This can further complicate matters—especially when said sibling is refusing to leave and/or won’t agree to sell.

In a situation like this, there are a few options, such as agreeing to let the sibling stay and pay rent, asking them to buy out the other shares, or forcing the sale of the home through what’s known as a partition action.

Similar to dealing with a sibling who won’t sign probate, the recommended way to address a sibling who is refusing to vacate the property is to communicate and try to reach a mutual agreement. This way you will avoid costly and emotionally taxing litigation.

Here’s more information about your options if a sibling is living on the inherited property.

How Does Selling One’s Share Work?

Another solution for co-owners of inherited property is to sell their shares to one or more of the other beneficiaries.

For instance, let’s say you and your two siblings have jointly inherited your parents’ home. If you’d like to sell the property and get the cash value for your portion, but your siblings want to keep the home, they might agree to buy out your share. 

In this case, everyone gets what they want. You get to cash in your share of ownership and walk away from the responsibilities (and rights) of the property, and your siblings get to keep the home they don’t want to sell.

Of course, a transaction like this takes coordination, mutual agreement, and most importantly, access to funds. You’ll need to negotiate a fair price (typically based on the appraised value of the home) and arrange the logistics of the sale. 

If the sibling doing the buy-out doesn’t have enough cash on hand to complete the purchase, a payment plan may be necessary, or they may need to take out a loan. 

Here are some additional details about selling or buying a sibling’s share of inherited property. 

Selling Inherited Property with Multiple Owners

Perhaps the easiest and least complicated way to deal with a property that you’ve inherited with multiple beneficiaries is to sell it. 

If all siblings agree that selling is the best option, then you’ll need to work through the following steps:

1. Have the Property Appraised – Hire a professional appraiser to assess and assign a fair market value to the property. This is also important from a tax perspective, as it will determine how much you’ll owe in capital gains.
2. Prepare the Property for Sale – Address any repairs and renovations that may be necessary in order to make the property more marketable. You may also want to clean up and stage the property to make it more appealing to buyers.
3. List the Property for Sale – Decide whether you’d like to hire a real estate agent and sell the home through a traditional sale or engage with an investor and sell the house for cash. In either case, choose someone who is reputable and has specific experience with these types of transactions.
4. Negotiate a Fair Price – Consider the offers you receive from buyers or from a cash investor, do some negotiating, and decide together on an agreeable sale price. All siblings should be on the same page for this step.
5. Close the Transaction – Complete the sale and divvy up the proceeds to all beneficiaries accordingly. The amount each sibling receives will be determined by the type of ownership (joint or tenants in common) and at which percentage.

Why Consider a Cash Sale?

Traditional home sales can take a lot of time and effort, and they also cost money. Not only do you have to invest in fixing up the property and readying it for sale, but you’ll also have to consider the fees and commissions that most real estate agents charge.

If the home stays on the market for a long period of time before it sells, you and your siblings will also be on the hook to keep up with all the expenses and ongoing maintenance of the property. Not to mention the risk you’ll run that the housing market could take a turn for the worst.

In the case of inherited property that is co-owned by multiple siblings, working with a cash buyer may be a better option. That way, you can sell the property quickly while avoiding delays, fees, and ongoing expenses. You’ll also likely minimize your tax obligations and potentially hedge against market volatility.

Here’s some more information about your options, rights, and responsibilities when selling a home with multiple owners. 

What to Do if Things Aren’t Working Out

Whether you and your siblings have been in conflict right from the start, or you’ve just recently begun disagreeing on how to handle the inherited property, there are some measures you can take to hopefully get everyone back on amicable terms.

• Sell Your Interest – As discussed above, if you find yourself at an impasse with your siblings, the best option may be to simply sell your share and remove yourself from the equation. 
• Buy Out Your Sibling(s) – Alternatively, if you can afford to do so and your siblings agree, you might consider buying out their shares and obtaining sole ownership of the property. Then, you can do with it whatever you choose.
• Gift Your Interest – If the inherited property is not valued at much, is too costly to maintain, or you simply don’t want the hassle of maintaining or selling your share, you could choose to give it to one or more of the other co-owners.
• Hire a Mediator – If you and your siblings are unable to reach an agreement on your own, then enlisting the help of a neutral third party might make sense. Ideally, look for a mediator who is experienced in inherited property disputes. 
• File a Suit for Partition Action – As a last resort, you may determine that the only way to resolve the situation is to get the courts involved. A partition action can be used to settle the disagreements and even to force the sale of the home if need be.