Inheriting property is not usually smooth sailing as many would expect, especially when sharing it with siblings. That’s because, in order to sell it, everyone who holds a share must provide their consent. People in varying financial situations have varying opinions or may not be on the best terms with their siblings. This often results in tension.
The best situation would be when all the shareholders agree to sell the house and split the money equally among themselves. They can also decide to rent out the house and share the rental income.
However, it does not matter if the siblings are united or against each other in regards to their views on the house. No party can force the sale of inherited property and an agreement must be made. One can sell their share of the house, either to the rest of the siblings, or a third party. However, third parties rarely want such deals, particularly when it means sharing it with family members in conflict.
We purchase inherited properties and so, you can reach out for help through the entire process.
Inheriting a house- What is the difference between tenants in common and joint tenants?
- Joint Tenants
In a joint tenant situation, all siblings have equal rights to the inherited house. If one of them passes away, then the rest automatically get their share.
- Tenants in Common
In this agreement, each sibling owns a defined and specific proportion of the house. If they agree that the property should be sold, then the income from selling the house should be divided in accordance with the percentage they own.
How to Sell an Inherited House with Siblings
After inheriting property, you have a few varying options of what to do, and this usually depends on if the siblings as a collective can come to an agreement on what they want to do with the inherited house. Here are some of the different options you have and a brief explanation of each.
(i) Selling the House and Splitting the Money
If you decide to sell the house with your siblings, then that’s the best and easiest situation. This process is similar to selling your own property. You can decide to list the house through a real estate agent, deal with a sell your house fast company or auction it.
The only issue you have to deal with in this scenario is that all siblings agree on the house’s sale price. This means you all need to accept the offer or bid.
(ii) Buying other Siblings Out
In most cases, each sibling will have an equal share of the property. A simple way to split the inheritance is one sibling buying the share of other siblings in the estate. You achieve this by accepting the value of the house and paying cash for the rest of the shares or applying for property repayments. If you are not able to get the latter, you can come to an agreement with the siblings for them to become lenders. This means you will pay them a certain amount per month until the share is paid off. However, it is advisable to have a lawyer involved to avoid issues down the line.
(iii) Not all Siblings Sell their Share
In some cases, siblings do not come to an agreement and not all may want to sell their share. In such a situation, you have the option to sell to a third party, although this can further make things complicated for the rest.
(iv) Keep the House as a Rental Investment
Another option to consider is to rent out the house, provided it’s in good condition. If you feel you and your siblings can be co-owners, then renting out can be a great source of additional income while keeping the property in the family. This can also provide adequate time for a sibling to get the necessary money to buy the shares of the estate of the rest.
Can Siblings Force the Sale of an Inherited House?
If you want to sell the property, but the rest want to keep the house, then you can go to court and request an Order to Sell. To achieve this, you are required to write to each sibling that you wish to sell, explaining why you feel the property should be sold. They can then agree or disagree to sell. If you are the only one looking to sell, then your argument should be compelling for the court to be on your side.
In some situations, the best way to about this situation is to hold onto the estate or own it together either as tenants in common or joint tenants.
Are you Required to Pay any Taxes on an Inherited House?
If you are looking to sell an inherited house, then you might be looking at inheritance tax, Capital Gains Tax, and income tax if it is applicable. However, the primary tax you need to be concerned about is the Capital Gains Tax. This is a complex topic that we think deserves a post of its own. With a good estate lawyer, however, you do not have to fret about the taxes and selling process.
And there you have it, important things you should know about inheriting a property with siblings.