Inheriting Property in Miami, Florida

Inheriting property in Florida, whether it is a home, a vacant lot, a rental property, or financial accounts, raises a number of legal and practical questions that must be addressed promptly. The steps you need to take depend on how the property was held, whether the decedent had a will or trust, and how many people are inheriting together. At the Law Offices of Albert Goodwin, PA, we guide heirs and beneficiaries through every stage of the inheritance process, from the initial probate proceeding to the eventual sale or transfer of the property.

Determine How Title Passes

The first step when you inherit property is to determine how the decedent held title and whether the property passes through probate or outside of it. Not all inherited property requires probate. Assets held in joint tenancy with right of survivorship, property held in a revocable living trust, accounts with designated beneficiaries, and property subject to a transfer-on-death deed or enhanced life estate deed all pass outside the probate process. If the decedent held the property in their individual name without any of these arrangements, the property must pass through probate before it can be transferred to the heirs.

For property that passes by will, the personal representative appointed by the court is responsible for administering the estate and distributing the property according to the will's terms. If the decedent died without a will, Florida's intestacy statutes determine who inherits and in what shares.

Probate vs. Non-Probate Transfers

In Florida, probate is required when the decedent owned real property or other assets solely in their name. The probate court supervises the administration of the estate, validates the will if one exists, resolves creditor claims, and authorizes the personal representative to distribute assets to the beneficiaries. Florida offers two forms of probate: formal administration for estates exceeding $75,000 in non-exempt assets, and summary administration for smaller estates or estates where the decedent has been dead for more than two years.

Non-probate transfers bypass the court entirely. If the decedent placed their property in a revocable trust, the successor trustee can distribute the property directly to the beneficiaries according to the trust terms. Similarly, property held as joint tenants with right of survivorship passes automatically to the surviving joint tenant by operation of law. Understanding which transfer method applies to each asset is critical for avoiding unnecessary delays and legal expenses.

Recording a New Deed

Once probate is complete or the non-probate transfer mechanism is identified, the next step is to record a new deed in the county where the property is located. For probated estates, the personal representative executes a personal representative's deed transferring the property to the beneficiary. For trust-held property, the trustee executes a trustee's deed. For property that passed by joint tenancy, the surviving owner typically records an affidavit of survivorship along with a certified copy of the death certificate. Properly recording the new deed is essential to establish clear title and protect your ownership rights.

Dealing with the Mortgage

If the inherited property has an outstanding mortgage, you need to understand your obligations. Under the federal Garn-St. Germain Depository Institutions Act, a lender generally cannot enforce a due-on-sale clause when property is transferred to a relative upon the borrower's death. This means you can typically assume the existing mortgage without triggering acceleration. However, you must continue making mortgage payments to avoid foreclosure. If you cannot afford the payments, you may need to consider selling the property, refinancing, or negotiating with the lender.

If the property has a reverse mortgage, the situation is more complicated. Upon the borrower's death, the reverse mortgage becomes due and payable. Heirs typically have up to six months (with possible extensions) to either pay off the loan balance or sell the property. If the loan balance exceeds the property's value, the heirs can satisfy the debt by selling the property for at least 95% of its appraised value, with the lender absorbing the remaining loss through FHA insurance. Understanding these timelines is critical to avoid losing the property to foreclosure.

Property Taxes, Insurance, and Homestead Exemption

Inherited property continues to accrue property tax obligations, and the heir who takes possession is responsible for keeping taxes current. If the decedent had a Florida homestead exemption, that exemption does not automatically transfer to the new owner. You must apply for a new homestead exemption with the county property appraiser if you intend to use the property as your primary residence. Be aware that losing the homestead exemption can result in a significant increase in property taxes, because the property will be reassessed at current market value without the Save Our Homes cap that may have been limiting annual assessment increases.

You should also immediately review and update the property insurance. The decedent's homeowner's insurance policy may lapse or become void upon their death. Contact the insurance company to transfer the policy to your name or obtain a new policy to ensure the property remains protected.

Capital Gains and Step-Up in Basis

One of the most significant tax benefits of inheriting property is the step-up in basis provided by Internal Revenue Code § 1014. When you inherit property, your tax basis in the property is generally stepped up to the fair market value of the property on the date of the decedent's death, rather than the price the decedent originally paid. This can dramatically reduce or eliminate capital gains tax if you sell the property shortly after inheriting it.

For example, if the decedent purchased a home for $150,000 and it was worth $500,000 at the time of their death, your basis in the property is $500,000. If you sell the property for $510,000, you would only owe capital gains tax on $10,000, not $360,000. This step-up in basis applies to property acquired by inheritance, whether through a will, intestacy, or trust. It does not apply to property received as a gift during the decedent's lifetime. Working with an attorney who understands estate tax planning can help you maximize this benefit.

Multiple Heirs Inheriting Property Together

When two or more people inherit property together, they typically hold it as tenants in common. Each co-owner has an undivided interest in the entire property, meaning no single heir owns a specific portion of the physical property. Each tenant in common has the right to use and occupy the entire property, regardless of the size of their ownership share. Co-owners must share responsibility for property taxes, maintenance, insurance, and mortgage payments in proportion to their ownership interests.

This arrangement works well when all co-owners agree on how to manage the property. Problems arise when they do not. One heir may want to sell while another wants to keep the property. One may be living in the property without paying rent or contributing to expenses. These situations are common and can quickly escalate into contentious disputes.

Co-owners should consider entering into a written co-ownership agreement that addresses key issues such as who will occupy the property, how expenses will be shared, whether any co-owner will pay rent for exclusive use, how decisions about repairs and improvements will be made, and under what circumstances the property will be sold. While not legally required, such an agreement can prevent costly litigation and preserve family relationships. An attorney experienced in real estate and estate matters can draft an agreement that protects all parties' interests.

Disputes Among Co-Heirs

Disagreements among co-heirs who inherit property together are one of the most frequent sources of real estate litigation in Florida. Common disputes include disagreements over whether to sell or keep the property, one co-owner occupying the property to the exclusion of others, failure to contribute to taxes and maintenance, one co-owner making improvements without the consent of others, and disputes over rental income.

When co-heirs cannot reach an agreement, any co-owner has the right to file a partition action under Florida Statutes Chapter 64. A partition action asks the court to divide the property among the co-owners or, if physical division is not practical, to order a sale and divide the proceeds according to each owner's share. The court will also consider claims for contribution, reimbursement for taxes and improvements paid by one co-owner, and credits for rental value if one co-owner has been in exclusive possession.

Selling Inherited Property

If you decide to sell inherited property, there are several steps to complete first. You must ensure that the title has been properly transferred into your name, that any probate proceedings are complete, and that all liens and encumbrances have been identified and addressed. If multiple heirs own the property, all co-owners must agree to the sale and sign the deed, unless a court orders the sale through a partition action.

Selling shortly after inheritance allows you to take maximum advantage of the step-up in basis, potentially minimizing or eliminating capital gains tax. The longer you wait, the more likely the property will appreciate beyond the stepped-up basis, resulting in a larger taxable gain when you eventually sell.

If you plan to sell inherited property that was the decedent's homestead, be aware that Florida documentary stamp taxes and title insurance requirements apply to the sale. You should also obtain a title search to confirm there are no outstanding liens, code violations, or other encumbrances that could delay or prevent the closing. If the property was in disrepair at the time of inheritance, you may need to invest in repairs or sell the property as-is at a reduced price. An attorney can advise you on the most cost-effective approach based on the condition of the property and current market conditions.

Renting Inherited Property

Some heirs choose to keep inherited property as a rental investment. If you decide to rent the property, you must comply with Florida landlord-tenant law under Florida Statutes Chapter 83, maintain the property in habitable condition, and report rental income on your tax returns. You may depreciate the property for tax purposes using the stepped-up basis as the starting value. The depreciation period for residential rental property is 27.5 years, and for commercial property it is 39 years.

If multiple heirs own the property, all co-owners should agree on the decision to rent and on how rental income and expenses will be divided. A written agreement among co-owners can prevent future disputes. Consider whether one co-owner will serve as the property manager or whether you will hire a professional management company. You should also determine whether rental income will be distributed regularly or held in reserve for future maintenance and repairs. Without clear agreements, disagreements over rental management are among the most common sources of conflict between co-heirs.

Inherited Property and Medicaid

If you are receiving Medicaid benefits or may need them in the future, inheriting property can affect your eligibility. Medicaid is a means-tested program, and inheriting real property or other assets may push you over the asset limits. Florida's Medicaid program exempts homestead property if you are living in it, but inherited property that you do not occupy as your primary residence will generally count as a resource. If you are in a nursing home and inherit property, the inheritance could disqualify you from Medicaid until the asset is spent down. Prompt legal advice is critical in these situations to explore your options and protect your benefits.

Florida's Medicaid estate recovery program also affects inherited property. Under Florida Statutes § 409.9101, the state may seek to recover Medicaid benefits paid on behalf of a deceased Medicaid recipient from the recipient's estate. This can include claims against real property that passes through probate. Property that passes outside of probate, such as property held in joint tenancy or in a trust, may be protected from estate recovery depending on the circumstances. Understanding how Medicaid interacts with inherited property is essential for preserving both the inheritance and any public benefits you or your family members may be receiving.

Timeline Considerations

Time is an important factor when dealing with inherited property. Creditor claims against the estate must be resolved within specific statutory deadlines. Under Florida Statutes § 733.710, creditors generally have two years from the date of the decedent's death to file claims against the estate, though this period can be shortened to three months if the personal representative publishes a notice to creditors. Property taxes continue to accrue regardless of whether probate has been completed. Insurance coverage may lapse if not promptly addressed. The homestead exemption application must be filed by March 1 of the tax year in which you are claiming the exemption.

The longer you wait to record a new deed, the greater the risk of title complications, including claims by other parties or issues with the chain of title. If the decedent's estate includes property in multiple Florida counties, each county requires a separate recording. Out-of-state property may require ancillary probate proceedings in the state where the property is located. Acting promptly with the guidance of an experienced attorney can prevent small oversights from becoming costly legal problems.

Contact a Florida Inherited Property Attorney

If you have recently inherited property in Florida or expect to inherit property in the future, the Law Offices of Albert Goodwin, PA can help you navigate every aspect of the process. We assist clients with probate proceedings, title transfers, partition actions, co-heir disputes, homestead protection, and tax planning for inherited assets.

Call us at 786-522-1411 or email us at [email protected] to schedule a consultation. Our office is located at 121 Alhambra Plz #1000, Coral Gables, FL 33134, and we serve clients throughout Miami-Dade, Broward, and Palm Beach counties.