Inherited Property Sale in Philadelphia | Sell Inherited Home Fast

A Step-by-Step Guide to Sell Inheriting House

Selling an inherited property in Philadelphia, Pennsylvania can be much more than just a real estate sale, as it can also be an emotional process that contains a web of legal complications. You may be mourning the loss of family while grappling with PA probate law, inheritance tax, and dealing with the messy process of emptying a house with years of family history.

Many Philadelphia families feel that the process is more than they can handle. From determining who has the legal right to sell the house to understanding the tax ramifications in PA, navigating this is a complicated and stressful process. Whether the house is in mint condition, or needs a ton of work, understanding your options is the first step to moving forward.

Here is a complete guide to how to sell an inherited home in Philadelphia. We will explain the legal intricacies, tax requirements, and options (including selling inherited homes for cash) that will help you avoid the hassles of an open market sale.

What Does Inherited Property Sale in Philadelphia Mean?

Selling inherited property in Philadelphia is when the beneficiary of a property receives a home from the original owner of the house after the owner has died, and that beneficiary makes the decision to sell the house.

These intricacies are influenced by the laws of the Commonwealth of Pennsylvania and the highly specific condition of the Philadelphia real estate market.

Selling an inherited property is different from a typical home sale where an owner moves for their own personal reasons. A sale of an inherited property involves what is sometimes termed as “involuntary ownership.” You didn’t go out and purchase a house. A house came to you, which is important as new “owners” may actually be unprepared to manage the responsibilities of the property. These responsibilities include the mortgage, utilities, insurance, and property taxes.

Why Philadelphia Laws are Important

In the United States, every state has a different set of real estate laws. Pennsylvania puts a lot of restrictions based on whether the decedent has a valid will. When a decedent dies and leaves a will, an Executor is appointed to manage the estate. When a person dies without a will, the person is said to die “intestate” and a court, usually, will appoint an Administrator.

Focusing on Philadelphia, the real estate laws are complicated even more based on the local transfer taxes and municipal liens (unpaid water, gas, gas) which are common with older row homes throughout the city.

These differences are important because without having the proper authority to act on the estate, you cannot sign a listing agreement or a sales contract.

How Selling an Inherited Home in Philadelphia Differs From a Typical Sale

Selling your home can be a personal and punctual process. You understand the awkward layouts, the history of the flooring, and the nature of the noisy neighbors. Selling an inherited home can be much more difficult as you may be selling a home that you have not lived in for years or a home that you have never lived in at all.

When selling a home in Pennsylvania, the seller is required to prepare a Seller Property Disclosure. However, when an Executor or Administrator of an estate hasn’t occupied a home, they are less obligated to make disclosures and are required to only disclose known material defects.

The Probate Process

The single biggest process that makes selling an inherited home different is the probate process. In Philadelphia, probate is done at the Register of Wills. This can add at least a few months to the timeline as you cannot just put a For Sale sign in the yard days after the funeral.

After a person dies, the estate must be opened. Once the estate is opened, Letters Testamentary or Letters of Administration need to be issued.

Multiple Decision Makers

In a standard home sale, usually one or two people make the decisions.

When there are multiple heirs involved in an inherited sale, things can get a little complicated. Consider three siblings who inherit a house in South Philly. All three of them need to agree to the sale price and terms. What if one sibling wants to sell for cash and the other wants to make renovations and list it on the MLS? Conflicts like these can delay a sale for an indefinite period.

Deferred Maintenance

Homes inherited in Philadelphia, especially those that were owned by elderly relatives for a long time, are likely to have a lot of deferred maintenance. Old plumbing, a row home’s structural issues, and outdated wiring (like knob and tube) are issues that you may encounter. Selling a house that has these issues will require a different strategy than selling a house that is move-in ready.

How to Sell an Inherited Home in Philadelphia (Step-by-Step Guide)

Rest assured, if you are ready to move forward, following a structured path will minimize stress and will allow you to remain compliant to all the legal requirements. This is how you sell an inherited home in Philadelphia in a few easy steps.

1. Confirm Ownership and Authority

Before doing anything else, you need to find out who has the legal right to sell the house.

Being named Executor in a Will means you must be sworn in by a Register of Wills. Only then can you obtain a “Short Certificate”, which grants you the authority to sign closing documents.

2. Open the Estate (Probate)

You most likely will have to complete probate if the decedent’s house was solely in their name. This requires filing the will and a rough estimate of the assets. If a house was placed in a Trust or owned in a spousal joint tenancy (with Rights of Survivorship), you could potentially avoid probate, but you should definitely contact a probate attorney.

3. Death Certificate

You will be required to have death certificates for the title company, the mortgage company, tax authorities, and the utility companies, so obtain several certified copies.

4. Liens and Debts

Before you can count on the sale proceeds, find out what debt exists. Conduct a title search to find:

Mortgages or reverse mortgages
Unpaid taxes on the property
Water, gas, and trash service bills
Judgments against the deceased or against the property

In Philadelphia, liens from PGW (Philadelphia Gas Works) remain with the property, not the owner, so these have to be removed at settlement.

5. Secure and Assess the Property

In case the property is vacant, secure the property by changing the locks, and ensure it is covered by insurance (standard homeowner’s insurance often excludes coverage on vacant houses after 30-60 days). Walk through the home to evaluate its condition. Does it need to be repaired and cleaned, or is it sellable as it is?

6. Choose Your Selling Option

Determine how you would like to sell the property. Depending on your timeline, the condition of the home, and your preferences, you can list it with a real estate professional, sell it on your own (FSBO), or to a cash buyer.

7. Close the Deal and Disperse the Proceeds

The closing process is initiated once you have accepted an offer. The estate account is the first to receive the sale proceeds, as it is used to settle the creditors and taxes before the heirs receive their portions.

Can You Sell an Inherited Property Before Probate in Pennsylvania?

You might be asking yourself whether you need to wait until the probate process is completed before the house is sold. The answer is usually no, provided the house is in probate, and you are still active in the probate process.

When the Executor or Estate Administrator is appointed, and in Pennsylvania, this person is given the power to sell real estate, they may actively list and sell the home. Court permissions are not usually required, provided there are no disagreements among heirs or the estate is not insolvent (No assets, only debts).
If the estate is still in the process of probate, and you are hoping to sell the house to probate house buyers, the title company will still need a Short Certificate and evidence that probate is active.
If no testamentary document exists, and there is no Administrator, you will need to stop the process, and go to the Register of Wills to get yourself appointed. When there is disagreement among the parties as to whom among them should be the Administrator, or if the will is contested, the process will be put on hold until the Orphans’ Court issues its decision.
Some circumstances are like the situation of property in a Living Trust, where probate is not necessary. The Successor Trustee may sell the property right after the owner dies if the trust documents permit them to do so.

Selling an Inherited House in Pennsylvania Along With the Associated Taxes

The most difficult part of an estate settlement are taxes. There are three types of taxes to think about for an inherited home.

Pennsylvania Inheritance Tax

One of the few states with an Inheritance Tax is Pennsylvania. This is tax is based on the value of the assets that the beneficiary receives. Tax rates are based on how closely related the beneficiary is to the deceased:

Beneficiary Type	Tax Rate	Notes
Spouse	0%	No inheritance tax
Parent/Stepparent of child 21 & under	0%	Exempt from tax
Children, Grandchildren, Lineal heirs	4.5%	Direct descendants pay 4.5%
Siblings	12%	Tax applies to brothers and sisters
Other heirs (nieces, nephews, friends, unrelated persons)	15%	Applies to all others

Reference: pstap.org – Guiding Clients Through Taxes on Their Inheritance

The tax is due 9 months after the death. When the house is sold, the tax is usually taken from the proceeds before the money is distributed to the heirs.

Selling Inherited Property and Capital Gains Taxes

When a house is sold, a capital gains tax is incurred based on the profit that was made from the sale.

Heirs in the United States benefit from what is known as a “step-up in basis.” When an asset is bequeathed, the value of the asset is considered to have adjusted to the fair market value on the date of death of the previous owner.

Assume, for instance, your parents acquired a house in 1980 for $50,000. When they died, the house was worth $250,000. You sell the house for $255,000 three months after their death. You will only be required to pay capital gains tax on the $5,000 profit and not on the entire $205,000 profit.

Property Taxes

Philadelphia Real Estate Taxes will remain the responsibility of the estate until the house is sold. If these taxes are overdue, interest and penalties will be applied, and they will be prorated at settlement when the house is sold.

Tax Type	Who Pays	When is it Paid?
PA Inheritance Tax	The Estate / Heirs	9 months after death (there is a discount if it is paid in 3 months)
Capital Gains Tax	The Heirs	Only on profit above the value at time of death
Property Tax	The Estate	Ongoing until sale is closed
Realty Transfer Tax	Buyer/Seller	At closing (Approximately 4.278% total in Philly)

All tax information in this section is based on official guidance from the Pennsylvania Department of Revenue and the City of Philadelphia Property Tax.