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How can you sell a house you inherited with relatives? Equally dividing property is often seen as the fairest way to bequeath certain forms of wealth to children, but it can create challenges. 

If you want to put a shared inheritance on the market, there are several avenues you can take to handle it maturely and avoid a dreaded legal battle. Here’s how you can get through the process with ease!

Understand How The System Works

While we have no inheritance taxes in Canada, what you would pay on selling a home you inherited varies, as there are different standards based on the type of property. When you inherit a house and decide to move into the house, the government considers it a primary residence. You don’t have to pay to have it transferred into your name. But you’ll have to take over the property taxes, insurance payments, any mortgage payments, etc.

If it’s a cottage or vacation home, however, it’s seen as a secondary residence and you may have to pay for ownership transfers. In Ontario, this can be a considerable amount, incurring probate fees of about 1.5% of the value of the property.

Either way, deciding to sell a house you inherited will mean the profit is subject to our Capital Gains Tax and probate fees:

  • Capital Gains Tax means you will pay taxes based on the fair market value at the time you inherited the home or vacation home until the time you decide to sell.
  • Probate fees (which, in Ontario, are known as the estate administration tax) have to be paid to the government of Ontario when an estate is probated. This tax is paid from the estate. If you’re the trustee or executor, you do not have to pay them yourself, but it will cut into the final amount of some inheritances.

Buy Your Relative’s Shares Before You Sell a House You Inherited

One option to simplify the process if you want to sell a house you inherited is to buy the others out. Decedents usually design their wills to split assets like homes equally among those to whom they want to leave the mjs-paperwork-body-imageproperty. What happens to that property is up to the inheritors. If you both agree to sell the house, you would work together and split everything 50-50 – the costs, the capital gains tax, and the profits.

But let’s say you want to sell while your relative doesn’t. In this case, you’d have to negotiate with them. If all goes smoothly, you could purchase your relative’s share in the home. If you do get the okay to purchase your relative’s share in the home, you can finance half the value with a loan. Once you’ve given your relative the money for their share, you can transfer the deed solely into your name.

 

Bring In The Right Professionals

investment construction - Matthew J. Scott - Property InvestmentsBefore you proceed with getting a loan for your relative’s share, you need to make sure that you don’t pay too much. Have an appraiser establish the house’s current fair market value, and hire a certified home inspector to spot any problems and repair opportunities.

Depending on the situation, you may need legal assistance. Many firms practice more than one type of law, and they can recommend the right lawyer for your needs. For example, if you need help with the sale of a property, they will connect you with a real estate lawyer. You should retain an estate lawyer to avoid costly mistakes, and a family mediator can help broker a deal between parties who might have different ideas when you are ready to sell a house you inherited.