How To Navigate The Probate Process In Michigan
If you just inherited a property there are many emotions and stresses you may be dealing with. You may have lost a loved one and must now handle the matter of their estate. The process of handling an estate is never easy or simple.
It can be a complicated and miserable process, but in this article we’ll break down the probate process to help un-complicate it for you. Let’s discuss the 3 Most Important Probate Questions below to help you understand how to navigate the probate process in Michigan.
*Please Note: At the end of this article is a link to a MUST READ article for someone dealing with inheritance and probate and we’ll also tell you how to get a FREE probate attorney!
1. How Much In Taxes Do I Have To Pay?
There are two types of taxes you ay be subject to; inheritance tax and capital gains tax.
Inheritance tax is a state tax paid by the person inheriting the property. It is paid before the property even comes into a beneficiary’s possession. Michigan DOES NOT have an inheritance tax. Click here to find out if your state has an inheritance tax. Some states exempt immediate family members.
- Next up is capital gains tax. There are two situations that can trigger you to pay capital gains tax.
- You sell your inherited property in two years or less. When you sell your house, you sell it above the tax assessed value.This second cause is easier to explain with examples.
- Michael purchased his house in 1990. He paid $100,000 for it and performed $50,000 of repairs. Michael’s tax basis before he died was $150,000. Anna inherits Michaels’s house. She calls an appraiser who lets her know the home is now worth $225,000. After learning How To Navigate The Probate Process, Anna then sells the house 3 months later for $225,000. Since Michael added the $50,000 in repairs she’ll only pay capital gains $75,000 which is the difference between her sales price of $225,000 and the“stepped-up basis” of $150,000 (100k purchase + 50K in repairs).
Capital Gains On Michigan Probate
(Hers’s a Capital Gains Tax Calculator)
There are a few vital details that you should know when considering capital gains tax. The first detail, the stepped-up basis mentioned in the example. The stepped-up basis is important because “Anna” (from the example), did not have to pay taxes on $125,000, but only $75,000. The second important thing to know is that the tax assessed value used to calculate capital gains tax is the assessed value at the time of death. In the previous example, this would be the date “Michael” passed. For example, if you choose to sell an inherited house a year and three months after your loved one’s death, the tax assessed value at the time of death is the number you use to calculate capital gains tax, not the date you sell the house.
2. Should I Sell or Keep an Inherited House?
If you’re wondering about selling your inherited house, there are two key factors that you should consider.
- Can I afford to keep the house?
- Will I make a profit if I sell the house?
For the first question, owning two properties is just not feasible for most people. You’ll be paying multiple property taxes, mortgages, and other taxes and fees. And if you’re thinking about selling your current property and living in the inherited property, then you must consider how long it will take to sell your current property. If you’re estimating that your current property is going to take around 3-6 months to sell, then you must be able to afford two properties for that entire time and possibly longer.
You can possibly make a profit selling your inherited property, but you need to consider taxes, who you’re going to sell the house to, how long it will take, and the time of year you’re going to try to sell the house. Selling your house with a realtor or by yourself can take time, time that you might not be able to afford.
3. How To Sell An Inherited House
If you’ve thought about your options and you’ve decided to sell your inherited house, then you must start thinking about how to sell the house. There are a few options with different pros and cons:
There are exceptions to each of these pros and cons, but in general, this is the case.
- For sale by owner
- Longer time on the market
- Less Profit
- Selling with an online source
- Faster than for sale by owner, but a longer time on market compared to using a realtor or investor.
- Cheaper than using a realtor
- Selling with a realtor
- Possibly a quick or slow sell (depending on realtor and conditions)
- Selling with an investor
- Quickest option
- Least complicated process
- How much profit depends on how much is owed on the property.
Selling your house with any of the first three options can take time, time that you may not be able to afford. If you can afford to wait, then you should consider the first three options. But keep in mind, time means money. The longer your house is on the market, the less profit that you’ll be keeping.
Why Call Us To Help You Navigate The Probate Process
If you would like to sell your inherited property immediately, without hassle, and avoid paying any monthly mortgage fees, then I would recommend Easy Sale Today.
Easy Sale Today is a large and reliable real estate investment company that purchases inherited homes every month. But it gets even better! If you know you’re going to inherit a home, you’re currently dealing with the probate process, and choose to sell your home through Easy Sale Today; Easy Sale Today will supply you with a FREE probate attorney. This attorney will help you through the entire probate process, not just the real estate portion of probate.
In some situations we can even provide a cash advance of $2,500* ahead of closing, to help with probate costs and other debts, once you have accepted our offer and a title search is complete. We can often advance $2,500* in as little as 24 hours!
In case you’re not familiar with the term probate, probate is the judicial process where a personal representative handles a deceased person’s will and estate. If you would like more information on the probate and inheritance, I recommend reading “What to Do When You Inherit a House? A Guide to Selling Your Inherited House.” This article lets you know what questions to ask when going through the probate process. It also has an easy to read glossary for confusing legal terms.
Below are multiple articles on inherited houses and the probate process. Wheter you plan to sell or just need some questions answered never hesitiate to give us a call 586-636-0088, we’re always here to help.