Inheriting a House: Keep It, Sell It, or Share It With Your Siblings
The short answer: if you inherit a house with siblings, you have four real choices: one of you buys the others out, you sell and split the money, you keep it together as a rental, or you keep it together as a family home. None of them is wrong, but the last two need a written agreement about who pays for what, or they tend to end in an argument. Until the estate gives someone legal authority, nobody can sell the house, and in the meantime it still needs insurance, utilities, property tax and the mortgage payment. Most of what goes wrong with inherited houses goes wrong in the first few months, when it sits empty and everyone assumes someone else is handling it.
This page assumes you are in the United States. State law varies, and tax questions belong with an accountant: this page tells you which questions to ask, not the answers.
First: Who Actually Owns It Right Now
How the house passes depends on how it was held, not just on the will.
- Joint ownership with a surviving spouse or a co-owner with right of survivorship: the house usually passes to that person straight away, outside probate.
- A living trust: the successor trustee manages it and follows the trust's instructions. Usually no court is involved.
- A transfer-on-death (or beneficiary) deed, available in many states: it passes to the named beneficiary outside probate.
- In the person's name alone, with or without a will: it goes through probate. The court appoints an executor or administrator, and that person controls the house until it is distributed.
If there is no will, state law decides who inherits; what happens when someone dies without a will walks through it. Either way, find the deed. The county recorder's office where the house is can give you a copy.
Until someone has authority from the court (often called letters testamentary or letters of administration), nobody can sign a sale, a lease or a mortgage change, even if every sibling agrees.
The First Month: Protect the House
An empty house is at risk, and so is its insurance. Before anyone decides anything:
- Call the home insurer. Tell them the owner has died and the house is empty. Many homeowner policies limit cover for a property left vacant beyond a set period, often 30 or 60 days. Ask what yours says, and whether you need a vacancy policy.
- Keep the utilities on, at least heat and electricity. A frozen pipe in an empty house in winter can cause more damage than everything else on this list. In cold climates, ask a plumber about winterising.
- Secure it. Change the locks if you do not know who has keys. Stop the mail or forward it to the executor. Put lights on timers.
- Keep paying what keeps the house. The mortgage, property tax and insurance are usually paid from the estate. If the estate has no cash yet, agree in writing which sibling is advancing money, so it can be paid back later.
- Take photographs of every room before anything is moved. It helps with the insurance, the inventory, and any later disagreement about what was there.
Do not move valuables out yet, even to keep them safe, without telling everyone in writing. What to do with a loved one's belongings covers sorting the contents once you are ready.
If There Is Still a Mortgage
The loan stays attached to the house. Federal law generally lets a relative who inherits the home keep making the payments without the lender calling in the whole loan; do you inherit their debt? explains the rule and what to tell the servicer. Keep paying while you decide; a missed payment in an estate is still a missed payment.
If it was a reverse mortgage, the clock is shorter. After the servicer sends a notice that the loan is due, heirs generally have 30 days to say whether they will buy, sell or hand the house to the lender, and then a limited period to complete it, which can sometimes be extended. If the house is worth less than the loan balance, the federal rules for most reverse mortgages let heirs keep it or sell it by paying 95% of its appraised value, and the insurance covers the rest. Call the servicer as soon as you can.
If they received Medicaid long-term care, the state may claim against the estate, and the house is often the largest asset. Ask the state Medicaid office before you sell.
The Four Options
1. One sibling buys the others out
Often the cleanest outcome when one person wants the house and the others want money. Get a professional appraisal, not an online estimate, and agree in advance that everyone will accept it, or that each side commissions one and you take the average. The buyer usually pays the others their share of the value, either from savings or by taking out a mortgage. The executor can often arrange it as part of distributing the estate.
2. Sell and split the money
The most common choice, and the one that ends the shared obligation fastest. The executor normally lists and sells the house. Agree first on the asking price range, which agent, and whether to spend money on repairs or sell as-is. Houses that have been lived in for decades often sell better as-is than people expect.
3. Keep it as a rental
Works when the siblings get along and one of them is willing to manage it, or you pay a property manager. Before anyone signs a lease, write down who collects rent, who approves repairs, how income and costs are shared, and what happens when one of you wants out. Ask an attorney whether owning it through a company makes sense in your state.
4. Keep it as a family house
The holiday cabin, or the place the grandchildren grew up visiting. This is the option most likely to end in a family rift, because costs keep arriving and use is rarely equal. If you choose it, agree in writing on: who pays the property tax, insurance and repairs, and in what share; how use is scheduled; and a buyout formula for anyone who leaves.
Taxes: The Questions to Ask
Inherited property is taxed differently from property you buy. Before you sell, ask an accountant:
- What is my basis in the house, and do I need a date-of-death appraisal to prove it?
- Does it change anything if I move in, rent it out, or sell it soon?
- Who pays the property tax for this year, and is the house reassessed when ownership changes in this state?
The appraisal is the one you will regret not getting. It is much harder to establish the value of a house as of a date several years ago.
When Siblings Cannot Agree
Co-owners who cannot agree can usually ask a court to order a partition: in practice, a forced sale, often at a lower price, with legal fees taken out first. It is the outcome almost everyone loses money on. Before it gets there:
- Put each person's preference in writing: keep, sell, or buy out, and at what price.
- Separate the house from the feelings about the house. The sibling who did the caring may feel the house is owed to them. Say it out loud; it is often the real disagreement.
- Use a mediator. Many probate attorneys can recommend one, and mediation costs a fraction of a partition suit.
When siblings disagree about a funeral has a method for agreeing on how decisions get made, and it works as well for a house as for a funeral.
Before It Goes
Whatever you decide, the last walk through a parent's house tends to arrive faster than expected. Photograph the rooms as they were, the height marks on the door frame, the garden. Record someone telling the story of the house. If the family is selling, ask the buyer whether you may dig up a plant from the garden; many agree.
Quick Answers
Can the executor sell the house without the heirs' agreement? Often yes, if the will or state law gives them that power and the court has appointed them, but many states require notice to the heirs, and some require court approval. Ask the probate attorney.
Can I live in my parent's house while the estate is open? Only with the executor's agreement, and it should be written down: whether you pay rent, and who pays the utilities and repairs.
Who pays the mortgage after a parent dies? Usually the estate, from the person's money, until the house is sold or distributed. If the estate has no cash, heirs sometimes pay and are reimbursed later.
Can one sibling force the sale of an inherited house? In most states, a co-owner can ask a court to partition the property, which usually means a sale. It is slow and expensive for everyone.
Do I have to pay tax when I inherit a house? There is no federal tax on simply inheriting it, though a few states have an inheritance tax. Selling it can have tax consequences; ask an accountant before you sell.
The house will belong to someone else one day; the stories from it do not have to go with it. GetMemorial gives your family a permanent place for the photos, the rooms and the memories. Start an online memorial whenever you are ready.
