Selling an inherited house

Selling an inherited house

It is one of the most frequent exits when we inherit a property (or part of it) and we are not interested in maintaining ownership. Many doubts can arise in this process, especially if it is a question of selling a house inherited between brothers. For example, what if a brother doesn't want to sell an inherited house? Can you sell an unregistered inherited home? How to declare the sale of an inherited apartment? Is there a personal income tax exemption for the sale of an inherited home?

Steps to sell an inherited house
The first thing you need to do in order to sell an inherited property is to accept the inheritance. Subsequently and once the property is registered in your name, you can proceed with its sale. This process can be complicated when there are several heirs.

Documents to inherit the house
The acceptance of the inheritance is the prerequisite for the sale of the property and for its approval it is necessary to have some documents:

Death certificate
certificate of last will
If any, the deceased's will
accept the inheritance
If you are the only heir, your consent before a notary will be sufficient to be able to proceed to the next steps. However, if there are multiple heirs (most often they are your siblings) more complex situations can arise if one of them does not wish to accept the inheritance.

If there is a will

In the case of a will, an inventory will be made of the assets and rights of the deceased, as well as his debts and obligations. The inheritance partition deed will then be created, in which it will be stipulated how the flow of inheritance is distributed among the heirs.

If there is no will
If the deceased has not left a will, the notary will establish who are the legitimate heirs and in what proportion, also in accordance with the law. Subsequently, the certificate of declaration of the heirs will be generated, which establishes who is called to inherit.

Having clarified this point, the deed of division of the inheritance will be prepared, in the same terms as in the previous case: the notary will carry out an inventory of the assets and debts of the deceased and will distribute the inheritance among the heirs.

When we accept a property as an inheritance and subsequently sell it, we will face a number of taxes:

Inheritance and gift tax: this is paid upon receipt of the inheritance and its amount depends on each autonomous community. It is a prerequisite for being able to register the property in your own name in the Property Register and must be paid within 6 months of the death of the deceased. There are deductions and reductions applicable to the closest heirs, so it is important to seek advice and know the applicable regional regulations.
Municipal Capital Gains: This local management tax is levied on the increase in urban land value, whenever it occurs. You must also pay it within a period of 6 months, taking into account the specific regulations of the municipality where the property is located. The municipal capital gain is paid (where applicable) both upon receipt of the property as an inheritance and upon subsequent sale. Starting from 9 November 2021 you will also have to pay both capital gains when the two operations are closed within the same year.

Registration of the property in the Cadastre
The deed of partition and inheritance attribution will make it possible to change the ownership of the real estate in the Land Registry, subject to payment of the related taxes.

Sale of the inherited house
Once the inheritance has been accepted, the assets will become the property of each heir in the proportion established in the deed of partition. It is then that it will be possible to proceed with the sale, so that the liquidity is distributed among all the heirs based on their share of ownership of the property.

The steps for the sale are the usual ones, even if, to avoid friction and conflicts in the event of multiple heirs, it may be advisable to designate a mediator who takes care of all the sale procedures.

It is also strongly recommended that you register the property's new legal situation in the Land Registry before proceeding with the sale, as this will provide maximum legal certainty for all parties involved.

Furthermore, the sale will be much easier if everything is in order, since the buyer will be able to know in detail the situation of the property, who it belongs to, if it is free of charges... before taking any step. It can also be an essential requirement for the buyer to obtain bank financing.

Tax for the sale of an inherited apartment
We are only subject to personal income tax if we sell the inherited house (not when we inherit it). If a capital gain occurs with the sale of the property, this must be entered in the Income Statement. In particular, you must reflect this in the personal income tax for the year in which the sale takes place. To calculate the capital gain, the sale value must be subtracted from the sale value. In the case of an apartment inherited by several siblings, each must declare their profit based on their shareholding.