Selling an Inherited House in Lincoln, NE
Inheriting a house in Lincoln can feel overwhelming. Amid grieving, you’re suddenly faced with a major asset that brings legal hurdles, tax questions, and often complicated family dynamics. Whether the home is a cherished family residence or a fixer-upper, selling it isn’t always straightforward. The good news is that Nebraska law provides clear rules—and recent tax law changes have made inheritance a little less burdensome. This guide walks you through the probate process in Lancaster County, the challenges of co-heirs, the latest tax implications, and the practical choices for selling an inherited property.
In a Nutshell: Key Takeaways
Beneficiary heirs in Nebraska need to understand a few critical points before deciding to sell. Probate is often required unless the home was held in a trust, joint ownership, or transferred with a Transfer-on-Death Deed (TODD). The IRS “step-up in basis” rule can significantly reduce or even eliminate capital gains tax, making a timely sale more favorable. Nebraska’s inheritance tax, once a big concern, is now phasing out, with many close relatives completely exempt in 2025. Finally, if multiple heirs inherit the home, all must agree before the property can be sold—meaning open communication and careful planning are key.
Navigating the Probate Process in Lancaster County
If the deceased owned the property in their name alone, it usually becomes part of their estate and must go through probate. Probate is the court-supervised process of validating a will, settling debts, and transferring ownership.
The Lancaster County Court oversees probate in Lincoln. The court appoints a Personal Representative (executor) to manage the process, which generally takes 6 to 12 months. Disputes between heirs or creditors can extend the timeline.
Probate can often be avoided if the home was:
Held in a trust.
Jointly owned with rights of survivorship.
Transferred with a Transfer-on-Death Deed (TODD).
If probate is unavoidable, the court’s involvement ensures debts are resolved before heirs can transfer or sell the home.
The Challenge of Multiple Heirs
Inherited property often comes with multiple owners. By law, all heirs must agree to sell the home. If everyone is on the same page, the process is straightforward. But if one heir wants to keep the property and another wants to sell, conflict can arise.
Options include:
Buyout: One heir purchases the others’ shares.
Mediation: A neutral professional helps negotiate a solution.
Partition Action: As a last resort, the court can order the home sold and proceeds divided.
While partition is legally available, it is costly and often strains family relationships. Whenever possible, cooperative agreements are better for everyone.
Tax Implications in 2025
Taxes are a major concern when selling an inherited property, but Nebraska heirs now face a more favorable landscape.
Capital Gains Tax & the Step-Up in Basis
Inherited property benefits from the IRS “step-up in basis.” The home’s value is adjusted to its fair market value on the date of death. This means you only pay capital gains tax on the increase in value between the date of inheritance and the sale.
Example: If your parents bought the home for $50,000 and it was worth $300,000 at the time of death, your new cost basis is $300,000. If you sell it soon after for $305,000, you only pay capital gains on $5,000, not the full $255,000 gain.
Nebraska Inheritance Tax (2025 Update)
Nebraska’s inheritance tax is being phased out. As of 2025:
Close relatives (spouses, children, grandchildren, parents) are completely exempt.
Remote relatives (nieces, nephews, aunts, uncles) face a low rate after certain exemptions.
All others may still owe, but at lower rates than in the past.
This is a significant relief for most families and reduces the financial pressure of selling quickly.
Real Estate Transfer Tax
When you sell, Nebraska charges a documentary stamp tax of $2.25 for every $1,000 of the sale price. This applies regardless of whether the property was inherited.
Choosing Your Selling Strategy
Once you’ve cleared probate and tax issues, you need to decide how to sell. Options include:
Traditional Realtor Sale: Maximizes value. Lincoln-based realtors know the local market but charge 5–6% commission.
For Sale By Owner (FSBO): Saves commission but requires you to handle marketing, showings, and paperwork.
Cash Buyers/Investors: Provide a fast, hassle-free sale and buy “as-is.” Offers are usually below market, but this option works well if the home needs extensive repairs or heirs want a quick resolution.
The best choice depends on your priorities: maximizing price, saving effort, or selling quickly.
Frequently Asked Questions (FAQ)
Do I have to go through probate to sell an inherited home in Lincoln?
Not always. Probate is required unless the property was held in a trust, transferred with a TODD, or jointly owned with survivorship rights.
How long do I have to sell the property?
There’s no strict deadline, but selling within a year is often wise to simplify taxes and avoid carrying costs like insurance, property taxes, and maintenance.
Do I need to make repairs before selling?
No. You can sell the property “as-is.” However, repairs may increase market value if selling through a realtor.
What if the house still has a mortgage?
Any outstanding mortgage must be paid off at closing. The estate or sale proceeds typically cover it.
Who pays expenses until the house sells?
The estate is responsible for mortgage payments, taxes, insurance, and utilities until the sale is finalized.
Final Thoughts
Selling an inherited house in Lincoln is not just about real estate—it’s about navigating probate, taxes, and often family emotions. With Nebraska’s inheritance tax now largely eliminated for close relatives, the financial burden is lighter than ever. Still, planning carefully and seeking legal guidance can make the difference between a smooth process and a stressful one.