Fair Market Value

• The fair market value of the house when beneficiaries receive it from the estate for tax purposes is its value on the day of the decedent's death. That value may not correspond with what the house is worth at the time you put it on the market, or if one beneficiary wants to purchase the portion of the property owned by other beneficiaries. If the house sells for more than the inheritance value, all owners are subject to capital gains tax. If the house sells for less, the beneficiaries may take a loss on their individual income tax returns.
  
  

Personal Possessions

• If the house contained family possessions and the decedent left items of value or sentiment behind without making a specific bequest in the will, make a decision with the other beneficiaries about who receives what and if items should be sold or donated to charity. While this should be done while the house is still owned by the estate, for practical purposes this does not always occur. Make sure beneficiaries remove all items it is mutually agreed they may have prior to any sale of the entire house to one beneficiary.
  
  

Estate Ownership

• All houses require regular upkeep, maintenance and property tax payments. While the house is still owned by the estate, the estate assets should pay for this upkeep. Decisions about selling a house owned by several beneficiaries are best made while the house is still in estate ownership. The executor can then put the property on the market, or if one beneficiary wants to buy out others, they have the time to find funds to make the acquisition. If the decedent also left liquid assets to the same beneficiaries and one beneficiary wants to own the house, the estate's attorney may arrange for the other beneficiaries to receive a portion of the assets that would otherwise go to the beneficiary home buyer to compensate for their percentage of the house.
  
  

Partition

• Partition is the legal term for a forced sale. In a worst-case scenario, if none of the beneficiaries come to an agreement regarding the sale of the house, one party may file a partition action. This lawsuit forces a property sale so proceeds may be split among all beneficiaries. Lawsuits are costly and divisive, so use this measure as a last resort.