How to Sell Inherited Land: Sell Inherited Property in Florida

I inherited property in Florida, what should I do first?

If you believe you have inherited a property, the first goal is to get clear title to the land. Clear title means you are the legal owner of the property and you're free to sell the land.

Most times, this means going through the legal process known as probate, although we discuss some exceptions below.  Probate involves paying off any debts that remain on the deceased’s estate and then distributing the inherited assets to the beneficiaries.

How to avoid Florida probate court

There are some ways to avoid probate in Florida with careful estate planning. They include transfer of a homestead property, living trusts, joint ownership with rights of survivorship, and lady bird deeds.

Homestead property

In Florida, a homestead can be passed on without probate. A homestead is someone's permanent residence, defined as a Florida property not more than 1/2 acre and the improvements on it. A homestead is exempt from creditor claims, so it is not subject to probate. 

Living trusts

In a living trust, the property owner signs a trust agreement during their lifetime. The trust assets will pass on to the beneficiaries without probate.

Joint ownership with rights of survivorship

In joint ownership with survivorship, two people share ownership while they are both alive. Legal title passes to the surviving owner automatically if either joint owner dies. Joint ownership with survivorship is common for spouses.

Lady bird deeds

A lady bird deed transfers a property to future beneficiaries, but the owner has the right to live in the property until their death. 

Probate process - understanding property laws in Florida

There are two main types of probate in Florida: formal administration and summary administration.

1. Summary administration

Summary administration is faster and cheaper than formal administration. Summary administration can be used for estates totaling less than $75,000 or when the decedent passed away more than two years ago. Summary administration is completed by submitting a petition to the court to direct the distribution of the deceased’s assets. There is not a personal representative or an executor named. If the court approves the petition, it will issue an order directing the distribution of assets.

If the decedent died with a will, the estate would be distributed according to the will. If the decedent died without a will, then the assets will be distributed according to Florida inheritance law.

2. Formal administration

Formal administration is more involved. Formal administration starts by naming a personal representative to administer the estate. Initially, the administration of the estate involves gathering the estate's assets, identifying estate creditors, and paying the deceased’s final debts and taxes.  When the probate process is complete, the personal representative will transfer the deceased’s assets to the beneficiaries.

If there is a will, the personal representative will submit it to the court to ensure it was constructed properly according to Florida law. If the will is found to be legally valid, then the personal representative can distribute the assets according to the will. 

How long will Florida probate take?

An estate must be open for a minimum of three months to give creditors a chance to make a claim. A simple probate estate may be resolved in six months.

Source: The Florida Bar

Prepare the land to sell an inherited property

Once you’ve obtained clear title to the land, you’ll want to start thinking about preparing the land for sale. Unless you sell to a cash buyer, you’ll probably want to do some maintenance to the property. The maintenance will help to show your land in the best possible light to prospective buyers. This could be anything from mowing or bush hogging, mending fences or a gate, or taking down a run-down building.

Once the property is cleaned up, you’ll want to take photographs of the land. Unless you’re selling to a neighbor or family member, you’ll need high-quality photos to get buyers interested in your land. Normally, it’s worth having a professional real estate photographer do this. They have specialized equipment to capture aerial drone imagery to showcase your land.

Inheritance tax and capital gains tax in Florida

Landowners often wonder how inherited property is taxed. Fortunately, there is no inheritance tax in Florida. There is a federal estate tax, but this is only triggered for inheritance worth several million dollars.

But you may have to pay capital gains tax. A capital gain is when you sell property for more than its tax basis. When you inherit real estate, the property’s tax basis readjusts to fair market value. That means that if you sell a property right away at market value, you would owe little or no capital gains tax.

If you wait to sell the inherited property you may have to pay more taxes. If time passes and the value increases, you may have to pay taxes. Short-term capital gains will apply if you sell the property with a gain less than a year after inheriting. Long-term gains will apply if you sell the property after a year or more. The taxable amount would be the difference between the property value at inheritance and the sale price. The tax rate on capital gains is 0%, 15%, or 20%, depending on your tax bracket and filing status.

Sell inherited property as-is

Once you’ve decided to sell the land, there are three options for selling your Florida land. The traditional way to sell land is to list it with a real estate agent.

The real estate agent will try to find a buyer for the property and help you with most of the paperwork. The benefit of working with a real estate agent is they will try to get the best possible price for you. The downside of working with a realtor is that it can take a long time to sell vacant land, and there’s no guarantee you’ll find a buyer. You may also have to invest in cleaning up the land before it’s ready to list for sale.

You could also sell the land by owner. Going this route, you’ll be responsible for all the marketing, dealing with potential buyers, and negotiating contracts. With inherited land, selling FSBO might be complicated because most of the work will fall to one person, while there might be more than one beneficiary from the sale. The benefit is that you can save costly real estate agent sales commissions when selling by owner.

The alternative is to sell to a cash buyer. The inheritance process is already complicated enough and this can save you some steps. You’ll be selling the land as-is so you won’t have to make any preparations. The disadvantage is you'd be selling the property at a discount.

Still, you may just want to move on from the property you've inherited. The convenience of selling hassle-free may be more important than getting the full market price. It's also the fastest way to sell vacant land - the whole process typically takes less than two weeks to sell land. If you like the idea of selling your inherited land quickly, consider requesting a cash offer today.

‍

Please consult your financial advisor, accountant, real estate attorney, or tax specialist. This article is for informational purposes and is not tax or legal advice.