Complete Guide to Selling Inherited Land in Oklahoma
Inheriting a piece of property can be a blessing or a burden. Many times, land will be sold soon after inheritance. There are a few reasons why an heir may want to sell inherited property:
- They may not have a use for the property.
- They may live too far away.
- They may not want to maintain the property.
- They may not want to pay property tax every year.
- They may want to sell the property quickly to avoid capital gains tax.
If you have inherited property, you will need to take some legal steps to get title to the property. You will also need to decide what you want to do with the property. If you decide to sell the property, there are a few different options available to you.
In this article, we will discuss the steps involved in selling inherited land in Oklahoma. We will also discuss the different options available to you when selling inherited land.
Key Takeaways
- Inheriting property may require legal steps to get title known probate
- Probate is the process of settling a deceased person's estate and distributing assets
- Exceptions to probate include real estate owned by a trust, joint tenancy, or tenancy by the entirety.
- There is no inheritance tax in Oklahoma, but capital gains tax may apply.
- Options for selling inherited land include selling to a cash buyer.
I inherited property in Oklahoma, what should I do first?
If you have inherited property, the first step is to get clear title to the land. Clear title means that you are the legal owner of the property and you can sell it or do whatever you want with it.
To get clear title, you will need to go through the legal process known as probate unless you meet one of the exceptions. Probate is the process of settling a person's estate after they die. This includes paying off any debts that the person owed (such as a mortgage) and distributing their assets to their heirs.
What is probate?
Probate is the legal process of administering the estate of a deceased person. This includes collecting the assets of the estate, paying the debts of the estate, and distributing the assets to the heirs.
In the state of Oklahoma, probate is handled by the district court in the county where the deceased person resided.
Why is probate needed?
Probate is needed to ensure that the assets of a deceased person are distributed according to their wishes. It also protects the interests of the heirs and creditors of the estate.
Without probate, anyone could claim to be the rightful heir to the deceased person's assets. This could lead to disputes and could delay the distribution of the assets. Probate helps to ensure that the assets are distributed fairly and quickly.
How to avoid Oklahoma probate court
Most real estate in Oklahoma has to go through probate. There are a few exceptions to the general rule that real estate must go through probate, including the following:
- Real estate that is owned by a trust. If the real estate is owned by a trust, it will not go through probate when the trustor dies. The trustee will continue to manage the property and distribute it to the beneficiaries according to the terms of the trust.
- Real estate that is held in joint tenancy. If the real estate is held in joint tenancy, it will not go through probate when one of the joint tenants dies. The surviving joint tenant will automatically own the property.
- Real estate that is held in tenancy by the entirety. If the real estate is held in tenancy by the entirety, it will not go through probate when one of the tenants dies. The surviving tenant will automatically own the property.
If the real estate does not fall under one of these exceptions, it will go through probate. The executor or administrator of the estate will be responsible for transferring the property to the heirs or beneficiaries.
Probate process - understanding inheritance laws in Oklahoma
The probate steps are similar whether the decedent passed away with a will or without a will.
- File a petition in the district court. There is a district court in each of Oklahoma's 77 counties. The district court is responsible for overseeing the administration of estates, including the appointment of personal representatives, the distribution of assets, and the resolution of any disputes that may arise.
- Publish a legal notice in a newspaper. The notice must be published once a week for two weeks.
- Hold a hearing on the petition. The hearing will be held in the district court. The purpose of the hearing is to determine if the petition is valid and if the executor or administrator is qualified to serve.
- Appoint an executor or administrator. The judge will appoint an executor or administrator if the petition is valid and the executor or administrator is qualified to serve. The executor or administrator is responsible for managing the estate and distributing the assets to the heirs or beneficiaries.
- Publish a notice to creditors. The notice must be published once a week for two weeks. Creditors must submit claims against the estate within 2 months of the notice being published
- Prepare an inventory of the estate. An inventory of the estate is a list of all the assets and liabilities of a deceased person. The inventory must include a list of all the assets in the estate. The assets must be valued and the inventory must be filed with the court.
- File an estate tax return. The executor must prepare and file an estate tax return with the Oklahoma
Tax Commission. If the value of the estate is greater than the exemption amount, the executor or administrator must file an estate tax return with the Internal Revenue Service. - Distribute the assets of the estate. The executor or administrator must distribute the assets of the estate to the heirs or beneficiaries in accordance with the will or the laws of intestacy.
How long will Oklahoma probate take?
The length of time it takes to complete a probate in Oklahoma can vary depending on a number of factors, including the size and complexity of the estate, the number of heirs, and whether or not there are any contested issues. Creditors must be given a minimum of two months to submit claims following publication of a notice in a newspaper. In general, however, a simple estate in Oklahoma can take anywhere from six to twelve months to complete.
How much does probate cost?
Probate involves expenses of administration which include:
- appraisal fees
- newspaper publication charges
- court costs
Court costs normally amount to a few hundred dollars.
There may also be attorney fees and personal representative fees. Attorney fees must be reasonable considering the services rendered and are subject to the approval of the district court. It's common for a simple estate to cost a minimum of $2,500 in legal fees.
The personal representative is allowed a fee, which is a percentage of the value of the probate property. For estate with value greater than six thousand dollars ($6,000), the rate is two and one-half percent (2 1/2%). The personal representative is not required to take a fee, and may waive their fee entirely.
Inheritance tax and capital gains tax in Oklahoma
Landowners often wonder how inherited property is taxed. Fortunately, there is no inheritance tax in Oklahoma. There is a federal estate tax, but this is only triggered for inheritance worth several million dollars.
But you may have to pay capital gains tax. A capital gain is when you sell property for more than its tax basis. When you inherit real estate, the property’s tax basis readjusts to fair market value. That means that if you sell a property right away at market value, you would owe little or no capital gains tax.
Short-term capital gains will apply if you sell the property with a gain less than a year after inheriting. Long-term gains will apply if you sell the property after a year or more. The taxable amount would be the difference between the property value at inheritance and the sale price. The federal tax rate on capital gains is 0%, 15%, or 20%, depending on your tax bracket and filing status.
You may have to pay capital gains tax at the state level as well. The Oklahoma capital gains tax rate is 4.75%.
The long term federal capital gains tax rate for the 2023 tax year are as follows:
2023 long term capital gains tax rate
Sell inherited property as-is
Once you’ve decided to sell the land, there are three options for selling your Oklahoma land.
List it with a real estate agent
A real estate agent can help you list your land on the MLS and find potential buyers. They can also negotiate the sale price and handle the paperwork. However, it can take a long time to sell vacant land, and there's no guarantee you'll find a buyer. You may also have to invest in cleaning up the land before it's ready to list for sale.
Sell the land by owner
You can save on real estate agent commissions by selling your land yourself. You can list your land on websites like Zillow and Trulia, or you can put up signs in the area where the land is located. However, you'll be responsible for all the marketing, dealing with potential buyers, and negotiating contracts. This can be a lot of work, and it may not be worth it if you're not familiar with the real estate market.
Sell to a cash buyer
Cash buyers like our company are willing to buy land quickly and without any contingencies. This can be a good option if you need to sell your land quickly, but you'll likely have to sell it at a discount.
Still, you may just want to move on from the property you've inherited. The convenience of selling hassle-free may be more important than getting the full market price. It's also the fastest way to sell vacant land - the whole process typically takes less than two weeks to sell land. If you like the idea of selling your inherited land quickly, consider requesting a cash offer today.
Sources:
- OKLAHOMA STATUTES TITLE 58. PROBATE PROCEDURE, https://oksenate.gov/sites/default/files/2019-12/os58.pdf
- ESTATE PLANNING: A Simplified Guide for Oklahoma Farm and Ranch Families, https://extension.okstate.edu/programs/farm-management-and-finance/annies-project/site-files/docs/estate-planning-booklet.pdf
Please consult your financial advisor, accountant, real estate attorney, or tax specialist. This article is for informational purposes and is not tax or legal advice.
