9 Steps to Selling an Inherited House in Michigan

Selling an inherited house in Michigan starts with paperwork, not a sign in the yard. Someone needs legal authority to sell, the estate has to protect and pay for the house in the meantime, and the heirs need the right tax numbers before a price is set. These are the nine steps, in the order most families meet them.

The nine steps, in order:

1. Confirm who has authority to sell
2. Check the letters for a sale restriction
3. Rescind the exemption and budget for taxes
4. Insure and protect the empty house
5. Keep the mortgage and bills current
6. Get a date-of-death value for the tax basis
7. Know when the taxable value uncaps
8. Handle the disclosures the right way
9. Agree on a price and how to sell

1. Who has the legal right to sell an inherited house in Michigan?

The person who can sell a Michigan house still titled in the late owner's name is the personal representative of the estate. Proof of that authority is Letters of Authority from the probate case. In Oakland County, the probate court sits at 1200 North Telegraph Road in Pontiac. A house held in a living trust is handled by the successor trustee instead.

A strong start has the death certificate, the will if there is one and the current deed in hand before anyone talks price. The Oakland County Probate Court charges $175 to open an estate formally, and Letters of Authority cost $12 each.

Signing a listing agreement or accepting an offer before anyone holds letters is the common misstep. The title company will ask for proof of authority before closing, and a deal signed by the wrong person stalls.

2. Do I need court approval to sell a house in probate in Michigan?

A Michigan personal representative can usually sell estate real estate without asking the court, unless the court has restricted that power. In Oakland County, letters issued in a formally opened estate carry this restriction: "The personal representative shall not sell any real estate without further order of the court."

Read the letters before listing. If the restriction is there, the sale needs a petition on SCAO form PC 681, Petition for Approval of Sale of Real Estate. The form asks for the buyer, the price, the property's state equalized value and the liens, so a strong purchase agreement makes court approval a stated condition.

Signing a firm purchase agreement with no court approval condition is the risk when the letters are restricted. If approval takes longer than the closing date allows, the buyer may walk, and the estate starts over.

3. What happens to the property taxes on an inherited house in Michigan?

When a Michigan homeowner who claimed the principal residence exemption dies, the exemption must be rescinded. The estate's personal representative or trustee files Form 2602 with the assessor within 90 days of the death. Without the exemption, the house pays up to 18 more mills of school operating tax.

Budget for the higher bill while the house is listed. In Rochester Hills' Rochester Community Schools area, the 2025 total was 30.8553 mills with the exemption and 48.8553 mills without it. On $150,000 of taxable value, that is about $2,700 more a year.

Leaving the exemption in place because nobody lives there yet is the mistake. A later denial can bring back taxes and interest, which come out of the estate.

4. Do I need special insurance for a vacant inherited house in Michigan?

An empty house often needs different insurance. Many standard homeowners policies cut back coverage once a home has sat vacant for a set period, often 60 days. Vandalism and glass breakage can stop being covered at all. An inherited Michigan house usually sits empty while the estate is settled.

Call the insurer in the first week, report the death and the vacancy, and ask what the policy covers now and what a vacancy endorsement costs. Keep the heat on through a Michigan winter, shut off water to fixtures that are not in use, and have someone check the house weekly.

Leaving the late owner's policy untouched is the gamble. A burst pipe or a break-in found after the vacancy period can turn into a denied claim and a much lower sale price.

5. Who pays the mortgage on an inherited house in Michigan?

A mortgage on an inherited house still has to be paid, usually from estate funds, until the house sells. A federal law, the Garn-St Germain Act of 1982, generally stops a lender from calling the loan due because the home passed to a relative at the owner's death. The CFPB calls the people who receive the home successors in interest.

Send the servicer a copy of the death certificate and the Letters of Authority. Ask how it will handle the account while the estate is open. Keep paying the mortgage, the taxes and the insurance on schedule.

Stopping payments while the family decides is the expensive pause. Late fees and default notices pile up against the estate and can force a rushed sale.

6. How do I figure capital gains on an inherited house?

The IRS sets the tax basis of inherited property at its fair market value on the date of the owner's death. An estate can elect an alternate valuation date instead. That stepped-up basis replaces what the parents paid. The IRS also treats inherited property as held for more than one year, so any gain is long term.

Order a written appraisal as of the date of death. For example, a house bought decades ago for $90,000 and worth $400,000 at death that sells for $410,000 shows a gain of about $10,000 before selling costs, not $320,000.

Skipping the appraisal and guessing later is the costly shortcut. A weak basis record invites a bigger taxable gain, so ask a tax professional how to report the sale.

7. Will inheriting the house uncap the property taxes in Michigan?

Inheriting a Michigan home does not uncap its taxable value when it passes to the late owner's spouse. The same is true for the late owner's or spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson or granddaughter. Under MCL 211.27a, the home then cannot be used for any commercial purpose.

If a qualifying heir keeps the house for a while, the capped taxable value can carry over, which matters if the sale takes a year or more. The assessor can ask for proof of the relationship, due within 30 days.

Assuming the low taxes travel to the buyer is the misunderstanding. A sale to an outside buyer is a transfer of ownership, so the taxable value uncaps for that buyer the next year. Heirs outside the list, such as nieces and nephews, uncap the value when they inherit.

8. What do I have to disclose when selling an inherited house in Michigan?

Michigan's Seller Disclosure Act does not apply to transfers by a nonoccupant fiduciary handling a decedent's estate, guardianship, conservatorship or trust, under MCL 565.953. It also excludes transfers ordered by a probate court. So a personal representative who never lived in the house usually does not fill out the statutory disclosure form.

The federal lead paint rule still applies to a home built before 1978. EPA's list of exempt sales does not include estate sales, so the seller provides the lead pamphlet, any known reports and the 10 day inspection opportunity. Share what the family knows in writing.

Treating the exemption as permission to hide a known defect is the risk. MCL 565.961 keeps the general law on fraud and misrepresentation in force, and an heir who sells in their own name after the estate closes may not qualify for the fiduciary exemption at all.

9. Should heirs list an inherited house or take a cash offer in Michigan?

Heirs selling a Michigan house usually choose between listing it on the open market and taking a direct cash offer. A listing puts the house in front of every buyer at once. Redfin put Rochester's median sale price at $561,744 in June 2026, with 16 median days on market and homes selling at 101.1 percent of list price.

Put the date-of-death appraisal, a written pricing opinion from two or three Rochester realtors and any cash offers side by side, each net of costs. In Rochester, Rochester Hills and Oakland Township, where The Delia Group works, recent sales make that comparison concrete.

Taking the first cash offer without seeing what the market would pay can cost the estate real money, and every heir shares that loss. Put the decision and the price in writing so no heir is surprised later.

Frequently Asked Questions

How much money can you inherit without paying taxes in Michigan?

Michigan's inheritance tax applies only to people who died on or before September 30, 1993, so heirs of recent estates do not owe it. The federal estate tax exclusion is $15,000,000 for 2026, and an estate generally owes no federal estate tax below that amount, less certain lifetime gifts.

What is the 2 year rule for inherited property?

The two year rule usually refers to the federal home sale exclusion. It lets an owner exclude up to $250,000 of gain, or $500,000 on a joint return, after owning and living in the home for 2 of the last 5 years. Heirs who never lived in the house usually rely on the stepped-up basis instead.

What happens if one sibling wants to sell and the other doesn't?

Once siblings own a house together, either one can ask a Michigan circuit court to partition it. If the house cannot be divided without great prejudice to the owners, the court can order it sold at public auction. Families can avoid that cost by agreeing on a buyout or a listing price first.

Can a sibling buy out of an inherited house?

Yes, a sibling can buy the house, but the sale needs care when the buyer is the personal representative or a close relative of that representative. Under MCL 700.3713, such a sale can be voided by another interested person. The exceptions include a will that authorized it or court approval after notice.

Talk to The Delia Group before you list an inherited house

The Delia Group is a Rochester, Michigan real estate team working with buyers and sellers in Rochester, Rochester Hills, Oakland Township and across Oakland County. Heirs selling a house in probate do best with the letters, the appraisal and the tax picture in hand before the price is set. Sellers comparing the best real estate agents in Rochester can start there.

This article is general information for Michigan heirs and sellers, not legal or tax advice. Probate, tax basis and disclosure rules depend on how the estate was opened and how title is held. Confirm your own situation with a real estate attorney or a tax professional.