If you're facing the loss of a loved one, you may have questions about the transfer of assets, particularly when it comes to real estate. Inheriting property and potentially selling it involves specific procedures that must be followed.
Once heirs are designated, they may need to manage the sale of one or more properties. There are various options available to navigate this process. Here's everything you need to know on the topic.
What is an estate sale?
An estate sale refers to the sale of property and possessions after someone passes away, typically when heirs or beneficiaries wish to sell inherited assets. This can include:
-
A house
-
An apartment
-
A condominium
-
A cottage
-
Any other item of value.
The existence of a will: a key factor to consider
The presence of a will is a crucial element in the inheritance process whether or not real estate is involved.
If the deceased left a will, the inheritance will be handled according to their wishes, known as a testamentary succession. If no will exists, the inheritance will proceed according to the laws of the jurisdiction, known as a legal succession.
Testamentary succession
In this case, the deceased has clearly outlined their final wishes in a will, which typically also names one or more executors to oversee the process.
The liquidator is responsible for managing the estate and ensuring the deceased’s wishes are carried out. Their duties include:
-
Creating an inventory of the assets to be distributed
-
Paying any estate taxes
-
Designating the beneficiaries of the estate
After completing these tasks, the liquidator distributes the estate to the heirs and remains in charge until all responsibilities are fulfilled. It's important to note that if the liquidator is not an heir or involved in the estate, they may be entitled to compensation for their work.
Legal succession (without a will)
In the case of legal succession, the distribution of assets follows specific rules that must be adhered to. The surviving spouse is entitled to half of the net estate, as well as any assets they are entitled to under matrimonial laws. The distribution of the remaining assets can vary depending on several factors:
-
Whether the deceased had children
-
Whether the deceased’s parents are still alive
-
Whether the surviving spouse has siblings, and if those siblings have children
For more detailed information on how a legal estate is distributed, the Quebec government provides a distribution table to help clarify the process.
Inheritance: how to sell a property?
Whether the inheritance is legal or testamentary, you must wait until the entire estate has been divided by the executor before putting the property up for sale. Once the liquidation process is complete and the assets are fully distributed, the sale of the property can proceed.
1. Obtain the property transfer declaration
The first step in selling an inherited property is to obtain a property transfer declaration. This document, drafted by a notary, officially validates the transfer of ownership and is then registered in the Quebec Land Registry.
Several documents are required to prepare the property transfer declaration:
-
A death certificate
-
A deed of sale, to prove the deceased was the owner of the property
-
A certificate of location
-
A will (if applicable)
Depending on whether a will is present, the process will follow the rules for either legal or testamentary succession.
2. Get agreement from all heirs
If multiple heirs are involved in inheriting the property, everyone must agree on the decision regarding the house. If there is any disagreement, the heirs will need to find a common solution, which may involve a more complicated process for calculating the inheritance distribution.
Once all heirs agree to sell the property, the process can begin. If you're the sole heir, however, the decision is entirely up to you.
3. Renovate before selling
Heirs may choose to carry out renovations on the inherited property before listing it for sale, with the goal of improving its condition and increasing its value. This step is optional.
The only obligation for heirs is to maintain the property in good condition until the transaction is completed. This includes basic upkeep, such as cleaning and caring for the property's exterior (trimming hedges, mowing the lawn, etc.).
Unless the property is very old and requires urgent repairs, it is generally not recommended to undertake significant renovations.
4. Sell the house with a real estate broker
Heirs can benefit greatly from hiring a real estate broker to sell the inherited property.
Experienced in handling such situations, a broker guides the heirs through the entire sales process and helps resolve any potential conflicts that might arise. Their expertise is invaluable, as they are familiar with the necessary documents and procedures involved.
Furthermore, the broker will likely recommend selling the property without a legal warranty. This protects the seller from being held responsible if any significant defects in the property are discovered after the sale.
Do you have to pay taxes on an inherited house?
The answer depends on the type of property you inherit:
-
Primary residence: If the house was the deceased’s primary residence, generally, no tax will be due.
-
Secondary residence: If the property was a secondary residence, it will be subject to taxes. Specifically, half of the capital gain will be taxable. The amount owed can typically be paid using the proceeds from the sale of the property.
Estate liquidation: what to do with the furniture?
During an estate sale, it might be tempting to quickly dispose of everything to focus on grieving. However, it's important to take your time. Some pieces of furniture might hold value, either to future buyers or in the second-hand market.
1. Garage sale
One option is to hold a garage sale during the estate sale to sell off some furniture. This works well for items that are still in good condition but no longer needed.
You can plan the sale for a weekend that aligns with good weather or when your municipality schedules such events. Make sure to get the proper permits, as this will help attract a larger crowd and maximize the event’s success.
2. Selling online
Another way to sell furniture and other items is through online platforms like Facebook Marketplace or Kijiji. However, be prepared to manage numerous messages and inquiries from potential buyers.
A good strategy could be to first hold a garage sale, then sell any unsold items online at a discounted price. This allows you to make some extra money and prevents functional items from going to waste.
3. Estate auction
If you're looking for a more formal option, you can consider holding an estate auction. Estate auctions organize public sales of inherited items and assist individuals in parting with their belongings.
Unlike garage sales or online selling platforms, where buyers often negotiate for lower prices, an auction allows the sale to go to the highest bidder, often fetching a better price for valuable items.
FAQ on estate sales
Here are some additional pieces of information that might be useful.
Is an inheritance taxable in Quebec?
There is no direct inheritance tax in Quebec. However, before transferring assets to the heirs, the estate executor must ensure that all the deceased's debts, including any income taxes owed at the time of death, are paid.
What are the estate fees on the sale of a house?
Managing the estate of a house can incur various fees, such as:
-
Notary fees
-
Executor's compensation
-
Payment of the deceased’s taxes
-
Payment of capital gains tax, if applicable
What is the deadline for settling an estate in Quebec?
From the date of death, heirs have 6 months to accept or refuse the inheritance. However, this period can be extended by up to an additional 60 days after the inventory is closed to make a decision.
When can an inherited property be sold?
An inherited property can be sold once the estate has been liquidated, the legal documents are in order, the heirs have given their consent, and the property title has been transferred.
Do all heirs need to agree to sell?
Yes, if there are multiple heirs, all of them must agree to the sale process.
Do you want to sell an inhereted house?
XpertSource.com can help you find a real estate broker. When you tell us about your project, we put you in touch with qualified resources for free. Simply fill out our form (it only takes a few minutes) and we will connect you with professionals.
