Documents Needed to Sell an Inherited House in Maryland

Inheriting a house in Maryland brings mixed emotions. While it can be a sentimental reminder of a loved one, you might need or want to sell the property. 

Knowing what documents you’ll need is a necessary step when selling property in probate.

Here at Creo Home Buyers, we understand. We specialize in helping Maryland homeowners sell their houses quickly and conveniently, whether you prefer cash, flexible terms, or a fast closing.

This guide will help the process by outlining the essential documents you’ll need to sell your inherited house in Maryland.

Legal Documentation Required for Inherited Homes in MD

When you inherit property in Maryland, you will likely need to go through the probate process. If your inherited property was placed in a living trust before the deceased passed away, then you can avoid probate.

To sell an inherited house during probate, you must be able to provide the following legal documentation proving your ownership of the property:

  • Last Will & Testament: Often shortened to “will,” this document outlines how the departed wanted their assets (property, belongings, money, etc.) to be distributed after their death. It also allows them to appoint a guardian for minor children and an executor to handle the probate process.
  • Death Certificate: An official document issued by a government agency. The Maryland Division of Vital Records is the state agency that issues certified copies of Maryland death certificates. These certificates confirms a person’s death. It typically includes details like the deceased’s name, date and place of death, cause of death, and possibly information about the person who reported the death. A death certificate is essential for those looking to sell inherited property in Maryland’s real estate market.
  • Complex Estate or Disputes: If the estate of the deceased is particularly complex, with a large number of assets or disagreements among heirs, the probate process might involve court filings like petitions or orders to resolve these issues.

MD Inherited Property Related Documentation

When selling an inherited house in Maryland, property-related documentation plays a significant role. Here is a list of paperwork essential for to sell the house that you inherited:

  • Property Deed: A legal document that proves ownership of a property. It will show the deceased person’s name (if the property has not yet been transferred) or the names of the inheritors on the title after the probate process is complete. Additionally, the deed will show a description of the property (including address and lot size), and any restrictions or easements associated with the land.
  • Outstanding Mortgage: If the deceased had a mortgage on the property, it will become the responsibility of the estate. You’ll need to determine if the mortgage will be paid off before the sale or if the buyer will take over the loan.
  • Formal Appraisal: While not mandatory (unless mandated by the court), getting a professional selling appraisal can be helpful in Maryland. An appraiser considers factors like location, size, and overall condition to establish a fair market value for the inherited house.
    • Important to Note: Courts will often require that a house in probate receive an official appraisal to determine the fair market value of the property. Knowing the property’s value is necessary to in order to obtain approval from the courts if there are debts to be paid off during probate.
  • Inspection Reports: Having inspection reports from qualified professionals can be advantageous when selling an inherited property. These reports assess the condition of various aspects of the house, like the roof, electrical system, and plumbing. While buyers might still request their own inspections, having these reports upfront can potentially avoid surprises during negotiations and address major issues before you list the property for sale. A seller inspection can also help you decide the best way to sell inherited property.

Inherited Maryland Property Tax Related Documentation

While you won’t necessarily need to provide these documents directly to the inherited property buyer or settlement agent, having them on hand be helpful for tax purposes. You may be subject to estate tax or capital gains tax based on the value of the property when you sell your house that’s been inherited.

Here’s a breakdown of what these documents are and why they’re important to sell your inherited property:

  • Deceased’s Last Tax Return: This document shows the reported income received and taxes paid by the deceased. This can be helpful in preparing the following year’s tax return for the deceased and ensuring it is filed correctly. It’s a key piece in calculating potential capital gains taxes you may owe when selling the property.
  • Recent Property Assessments: Issued by the county government, these records estimate the assessed value of the property for tax purposes. This can be a helpful reference point for understanding the property’s overall value but are considered unreliable for true market values in Maryland.
  • Records Related to Property Improvements: If you made any significant improvements to the property since inheriting it, receipts or invoices for these improvements can be valuable documentation. They might be used to increase the property’s basis (cost for tax purposes) and potentially reduce capital gains taxes.

Selling an Inherited House and Capital Gains 

These documents are essential for determining your capital gains tax liability when selling the inherited property. Capital gains tax is essentially the tax you pay on the profit made from selling an asset (like real estate) for more than you acquired it for.

In the case of inherited property, the basis (cost for tax purposes) typically gets “stepped-up” to the fair market value on the date of death. This means you generally won’t owe capital gains tax if you sell the property for the same amount or less than the value on the date of death.

However, if you sell for more than the date of death value, the difference is considered a capital gain and may be subject to taxation. Having the documents mentioned above will help you accurately calculate your basis and potential tax liability.

Before selling an inherited house in Maryland, it is advisable to consult with a tax professional to ensure compliance with state regulations. They can help you navigate any tax obligations and prepare the required documentation to facilitate the sale of the inherited property.

Additional Paperwork Needed When Selling an Inherited House

Aside from legal and tax-related documentation, there are other additional selling paperwork requirements for inherited property sales in Maryland:

  • Purchase and Sales Agreement: This is a legally binding contract between you (the seller) and the buyer outlining the terms of the sale. It specifies details like the purchase price, closing date, contingencies (conditions that must be met for the sale to proceed), and how the property will be transferred. A real estate agent can help draft this document to ensure it adheres to Maryland regulations.
  • Property Disclosures: This document requires you, the seller, to disclose any known material defects or issues with the property. In Maryland, specific forms are required for residential property disclosures. These forms ask about a variety of aspects like the condition of major systems (electrical, plumbing, roof), presence of hazardous materials (lead paint, asbestos), and any history of significant repairs or damage. Accurately completing the disclosure protects you from potential legal issues down the road.
  • Warranties and Guarantees: Unlike some other states, Maryland law generally doesn’t require sellers of inherited property to offer any warranties or guarantees on the property’s condition. “As-is” sales are common for inherited properties, meaning the buyer takes the property “with all faults.” However, there can be exceptions. For instance, if you have personal knowledge of a major, undisclosed defect, you might have a legal obligation to disclose it, even when selling as-is.

Skip the Stress of Selling an Inherited House and Get a Cash Offer

Once you’ve gathered the necessary documents to sell a house that’s been inherited in Maryland, you may not feel like dealing with additional stress. That’s where Creo Home Buyers comes in. We offer cash for houses in Maryland in any condition.

By considering a cash offer, you can move forward quickly and securely, with a guaranteed closing date and no need for repairs or multiple showings. Get a free quote today and see how easy selling your inherited property can be.

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