A Comprehensive Guide to Inheriting a House in Florida

Introduction

Inheriting a house in Florida can be both an emotional and complex proces, especially during a time of loss. Whether the property was left to you unexpectedly or as part of a planned estate, knowing what to do next can feel overwhelming. As an experienced Florida probate attorney, I’ve helped countless families navigate the legal and financial aspects of inheriting real estate. This guide is designed to give you the insights you need to handle your inheritance with confidence and clarity.

What to Do When You Inherit a House

Every situation is unique, but there are essential steps to take when inheriting a home. Here’s how to approach this process:

1. Confirm Ownership and Set Up Probate

The first step is determining if the property needs to go through probate—a legal process required to transfer ownership. In Florida, homes often qualify for a streamlined process called summary administration if the total estate value is under $75,000 or if the decedent passed more than two years ago.

Speak to me, a Florida Bar licensed probate attorney, to ensure proper legal steps are taken. Without clear title, you may face difficulties selling, refinancing, or even living in the home.

2. Secure the Property

Vacant properties are vulnerable to vandalism, theft, and weather-related damage. Ensure the home is locked, secure, and insured. I can get the home’s mail forwarded to my office or your home to prevent uncollected mail from piling up.

3. Assess the Home’s Condition

Conduct a thorough inspection to understand the property’s state. Look for signs of structural issues, water damage, or pest problems. This will help you determine how repairs or updates are going to affect the value of the property.

4. Transfer Utilities and Pay Outstanding Bills

I speak to utility companies to find out outstanding balances and send over proof that your loved one passed away. I also ensure the utilities are transferred to your name. This will prevent service interruptions and additional fees.

5. Understand Mortgage or Loan Obligations

If the house has an existing mortgage, you can hire me to contact the mortgage lender to discuss your options.  The good news is the law is fair on this point.  Florida law follows the Garn-St. Germain Depository Institutions Act of 1982, which provides significant protections for beneficiaries. Under this law:

• Lenders cannot demand immediate repayment if the property is transferred due to the death of the borrower, provided:
  • The property is residential (1-4 units).
  • The beneficiary is a surviving spouse or child of the deceased.
  • The beneficiary uses the property as their primary residence.

These protections ensure that lenders cannot demand immediate repayment solely because of the inheritance.

For commercial properties or residential properties intended for rental, I work with the lender to request permission to assume the mortgage.

               Trust and LLC Estate Planning and Asset Protection

People often ask me if putting their home in a trust will trigger immediate repayment of the mortgage.  This same law makes clear that putting the house into a trust is safe, plus it’s a great way to avoid future probate. However, transferring to an LLC may trigger a due-on-sale clause, so if you’re an investor looking to limit liability by moving your properties into different LLCs hire me to secure written permission from the lender before proceeding.

What Are Your Options for an Inherited House?

1. Living in the House and Avoiding Large Tax Increases

I can help you inherit the same (or a similar) tax rate that your loved one was paying on a homestead property, but there are specific steps and conditions that must be met. If your loved one passed away later in the year and you want to legally avoid paying more taxes on the home, hire me to represent you before the Value Adjustment Board to advocate for your tax savings.

Preserving Homestead Tax Savings After Inheriting Property: Timeframes and Deadlines

When you inherit a property in Florida, one of the most critical steps to protect your financial interests is ensuring the homestead property tax savings are preserved. However, the time you have to complete this process varies greatly depending on the date your loved one passed away. As a Florida attorney, I can guide you through the process and represent you in presenting extenuating circumstances to the Value Adjustment Board which can save you from paying much higher taxes every year.

The Deadlines: What You Need to Know

Florida law requires that:

• Ownership and Residency: You must own and occupy the property as your primary residence as of January 1 of the tax year for which the homestead exemption is sought.
• Homestead Exemption Application: You must file the homestead exemption application with the property appraiser’s office by March 1 of that year.

Failure to meet these deadlines can result in the property being reassessed at full market value, potentially leading to significantly higher property taxes.

How the Date of Death Impacts Your Timeframe

The timeframe you have to meet these deadlines depends on when your loved one passed away. Here are four examples to illustrate the differences:

• Example 1: Your Loved One Passed Away in January
  • Date of Death: January 10, 2025.
  • Ownership Transfer Deadline: You have until December 31, 2025, to transfer ownership and qualify for the homestead exemption for 2026.
  • Homestead Filing Deadline: File by March 1, 2026.
  • Timeframe: You have over 13 months to complete the process, allowing ample time to handle probate, transfer the title, and file for the exemption.
• Example 2: Your Loved One Passed Away in December
  • Date of Death: December 20, 2025.
  • Ownership Transfer Deadline: Ownership must be transferred by December 31, 2025, to qualify for the 2026 tax year.
  • Homestead Filing Deadline: File by March 1, 2026.
  • Timeframe: You have less than 2 weeks to handle the probate and title transfer. This can be extremely challenging, especially during the holidays, and missing the deadline could result in significant tax increases. Hire me to file an emergency motion with the court to try and get your order signed and transfer title before January 1st.

What Happens If You Miss the Deadline?

If the deadlines are missed, the property will be reassessed at full market value, leading to higher property taxes. The property will lose its homestead exemption, and the SOH cap limiting annual assessment increases to 3% will no longer apply.

How I Can Help

As your attorney, I can:

• Assist with Probate and Title Transfer: If you want to legally save money on your real property taxes let me know that you want me to prioritize reaching for that January 1 deadline. Then, I’ll handle the application process with the property appraiser’s office.
• Representation Before the Value Adjustment Board: If your loved one passes away at the end of the year, I can represent you before the Value Adjustment Board to explain why you were unable to meet the deadlines, and request that you keep the same low tax rate your loved one had.

Don’t Lose Your Homestead Tax Savings

The deadlines for preserving homestead tax benefits can be unforgiving, especially if your loved one passed away late in the year. please

2. Selling the Property

Selling is a popular choice, especially if multiple heirs are involved or the house requires significant repairs. As both a probate attorney and a licensed real estate broker with extensive experience in probate real estate sales, I offer a one-stop solution for managing your inheritance and the property’s sale. My clients appreciate the time-saving efficiency of working with someone who understands both legal and real estate processes. Buyers are often more confident when hearing directly from the attorney handling the probate, leading to stronger offers and faster transactions.  The sale of the house is free of capital gains.

Tax Implications of Inheriting a House

Understanding the tax consequences is essential for informed decision-making:

• Stepped-Up Basis: The IRS adjusts the property’s value to its fair market value at the time of inheritance. This minimizes capital gains taxes if you sell shortly after inheriting.
• Capital Gains Tax: The IRS rewards those who sell inherited property immediately, as it minimizes capital gains tax liability. Delaying the sale may require a date-of-death appraisal, which can cost $1,200 for residential properties or $6,000 for commercial ones. If you decide to wait a few years before you sell, but still want to avoid paying capital gains tax, you can hire me to coordinate with 1031 exchange providers to help you defer capital gains taxes by reinvesting in a new property. By continuously using 1031 exchanges, capital gains taxes can ultimately be erased when the property is inherited by your beneficiaries with a new stepped-up basis.  This is a powerful and legal way to avoid taxes and save money.

3. Renting the Property

Renting out the home can provide a steady income stream, but becoming a landlord comes with responsibilities and risks. Hiring a property manager can mitigate these risks and simplify day-to-day operations. I can also help you set up an LLC to protect yourself from liability and manage the rental property effectively.

4. Coordinating a Buyout

If the property is left to multiple heirs, one party can buy out the others’ shares. Disputes often arise over the home’s value, with one party valuing it lower and another higher. As an experienced negotiator, I’ve successfully guided families through these situations, drafting agreements that satisfy all parties and ensure a smooth transaction. Having an attorney oversee these negotiations can help resolve conflicts and protect everyone’s interests.

Costs Associated with Inherited Property

While inheriting a house can be a blessing, it often comes with financial obligations. Here’s what to expect:

• Probate Costs: Filing fees, attorney fees, and related expenses depend on the estate’s complexity.
• Taxes: Florida has no state inheritance tax, but property taxes, federal estate taxes (for high-value estates), and potential capital gains taxes may apply.
• Repairs and Maintenance: You may need to invest in updates to make the property livable or marketable.
• Insurance: Ensure continuous coverage, as existing policies often lapse upon the owner’s death.

Reverse Mortgages

Notifying the Lender

One of the first steps I take on your behalf is notifying the reverse mortgage company of your loved one’s passing. This is a critical step because it starts the clock on timelines for resolving the loan. Lenders typically allow six months to determine how to repay the loan, whether through refinancing, selling the property, or other steps. I ensure this process is handled promptly so your family has the full time to make decisions.

Exploring Options

• Selling the Property: If the home’s market value exceeds the loan balance, selling it allows your family to keep the remaining equity. I guide you through the probate process to clear title and facilitate a smooth sale.
• Paying Off the Loan Balance: For families wishing to keep the home, refinancing or paying off the reverse mortgage is an option. I help determine the financial viability of this choice.
• Deed-in-Lieu of Foreclosure: If the loan balance exceeds the property’s value, I assist in drafting a deed-in-lieu of foreclosure to avoid stress and complications.

Avoiding Common Pitfalls

Inheriting a home is complex, but these tips can help you avoid common mistakes:

• Don’t Delay Legal Action: Waiting too long to address probate or lender communications can lead to penalties or foreclosure.
• Avoid Neglecting the Property: Unattended homes deteriorate quickly, reducing their value.

Conclusion

Inheriting a house in Florida can be a rewarding yet challenging experience. Whether you plan to live in, sell, or rent the property, having a clear understanding of your legal and financial obligations is crucial.  I am a qualified professional who can assist with probate, property sales, and tax issues. Let me help you navigate the complexities of inheriting property while protecting your interests.  As a probate attorney with extensive experience, I can guide you through every step of the process, ensuring that your inheritance is managed smoothly and efficiently.

To get in touch, you can:

1. Call my office at (305) 634-7790.
2. Email me at jo@jovalentino.com.
3. Fill out the online contact form on JOValentino.com.  Contact