The Complete Guide to Selling an Inherited House in Indiana & Kentucky

Inheriting a house is one of those life events that arrives wrapped in contradiction. There is grief over the loss of a loved one, gratitude for what they left behind, and then the very real, very practical question: what do I do with this property?

If you have inherited a house in Indiana or Kentucky, you are not alone. Thousands of families across both states face this situation every year, and the decisions you make in the first few months can have significant financial and legal consequences. Whether the property is a well-maintained family home in Louisville, a rural farmstead in Washington County, Indiana, or a house that has been sitting vacant for years, this guide will walk you through the entire process from start to finish.

We serve homeowners throughout southern Indiana and northern Kentucky, and we have seen firsthand how confusing inherited property situations can be, especially when two neighboring states have very different legal frameworks. This guide covers both.

What Happens When You Inherit a House

Before you do anything else, take a breath. There is no legal requirement to make immediate decisions about an inherited property, and rushing into a sale or major renovation without understanding your situation is one of the most common mistakes heirs make.

Here is what typically needs to happen in the first days and weeks:

1. Secure the property. Change the locks if necessary, make sure the utilities stay on (especially in winter to prevent frozen pipes), and verify that homeowner's insurance is in place. Many standard policies lapse or become void upon the owner's death, so contact the insurance company immediately.
2. Locate the will and estate documents. Check with the deceased's attorney, their safe deposit box, and their personal files. Whether a will exists dramatically affects what comes next.
3. Identify all heirs and beneficiaries. If there is a will, it should name the beneficiaries. If there is no will, state intestacy laws determine who inherits what.
4. Determine if probate is required. This is where Indiana and Kentucky diverge significantly, and it is the single most important legal question you need to answer.
5. Get a current assessment of the property's condition. Walk through the house and document its condition with photos and notes. This will be important for insurance, tax, and sale purposes later.

Understanding Probate: Indiana vs. Kentucky

Probate is the legal process through which a deceased person's estate is administered and distributed. If the inherited house is titled solely in the deceased's name (not in a trust or held as joint tenants with right of survivorship), probate will almost certainly be required before you can legally sell it.

Both Indiana and Kentucky have their own probate systems, and if you are dealing with property in one state while the deceased lived in the other, things get more complicated. Here is how each state handles the process.

Indiana Probate Process

Indiana probate is governed by Indiana Code Title 29 (IC 29-1). The process begins by filing the will (if one exists) and a petition for probate in the county where the deceased resided. If the deceased lived out of state but owned Indiana real estate, an ancillary probate proceeding may be needed in the Indiana county where the property is located.

Key aspects of Indiana probate:

• Supervised vs. Unsupervised Administration: Indiana allows unsupervised administration (IC 29-1-7.5), which is faster and less expensive because the personal representative can act without court approval for most decisions, including selling real estate. Supervised administration requires court approval for every major action.
• Timeline: A typical unsupervised Indiana probate takes 6 to 9 months. Supervised cases can take 12 months or longer. There is a mandatory 5-month creditor claim period after the first publication of notice (IC 29-1-14-1).
• Personal Representative Powers: Under unsupervised administration, the personal representative generally has the authority to sell real estate without a separate court order, provided the will does not restrict this power.
• Indiana Inheritance Tax: Indiana repealed its inheritance tax effective January 1, 2013. Estates of individuals dying after that date owe no Indiana inheritance tax regardless of the estate's value.

Kentucky Probate Process

Kentucky probate operates under Kentucky Revised Statutes Chapter 394 (wills) and Chapter 395 (administration of estates). The process is filed in the District Court of the county where the deceased resided.

Key aspects of Kentucky probate:

• Will Probate: Under KRS 394.130, a will must be presented to the court for probate. Kentucky still uses the traditional system where the executor must be formally appointed by the court before taking action.
• Timeline: Kentucky probate typically takes 9 to 18 months, though simpler estates can sometimes move faster. Creditors have 6 months from the appointment of the personal representative to file claims (KRS 396.011).
• Real Estate Sales: In Kentucky, the personal representative may need court approval to sell real estate unless the will specifically grants that power. Under KRS 395.195, the executor or administrator can petition the court for authority to sell real property.
• Kentucky Inheritance Tax: Unlike Indiana, Kentucky still imposes an inheritance tax (KRS 140.070). However, close relatives are largely exempt. Class A beneficiaries (spouse, children, grandchildren, parents, siblings) pay zero inheritance tax. Class B beneficiaries (nieces, nephews, aunts, uncles, sons-in-law, daughters-in-law) pay 4% to 16%. Class C beneficiaries (everyone else) pay 6% to 16%.

Indiana vs. Kentucky Probate: Side-by-Side Comparison

Factor	Indiana	Kentucky
Governing Statutes	IC 29-1 (Probate Code)	KRS Chapters 394, 395, 396
Typical Timeline	6 to 9 months (unsupervised)	9 to 18 months
Creditor Claim Period	5 months from first publication	6 months from appointment
Unsupervised Option	Yes (IC 29-1-7.5)	Limited / not standard
Court Approval to Sell Real Estate	Generally not required (unsupervised)	Often required (KRS 395.195)
State Inheritance Tax	None (repealed 2013)	Yes, for Class B and C beneficiaries
Small Estate Threshold	$50,000 (IC 29-1-8-1)	$15,000 personal property (KRS 391.030)
Transfer on Death Deed	Yes (IC 32-17-14)	No (not currently recognized)

Small Estate Procedures: Avoiding Full Probate

Both states offer simplified procedures for smaller estates, though the thresholds and processes differ considerably.

Indiana Small Estate Affidavit

Under IC 29-1-8-1, if the total value of the estate (minus liens and encumbrances) is $50,000 or less, heirs can use a small estate affidavit to transfer assets without opening a formal probate case. The affidavit can be used 45 days after death. However, there is an important limitation: this procedure works most smoothly for personal property. Transferring real estate with a small estate affidavit is possible in Indiana but requires careful execution and a title company willing to work with the affidavit.

Kentucky Small Estate

Kentucky's small estate provision under KRS 391.030 applies to estates with personal property valued at $15,000 or less after debts. This is a much lower threshold than Indiana's. For real estate in Kentucky, even small estate provisions typically require some form of court involvement. The dispensing of the estate without administration is addressed under KRS 391.030, but real property generally still requires a deed transfer through the probate process or through an affidavit of descent if title needs to be cleared.

Transfer on Death Deeds: An Indiana Advantage

One significant difference: Indiana recognizes Transfer on Death Deeds (IC 32-17-14), which allow a property owner to name a beneficiary who automatically receives the property upon the owner's death, completely bypassing probate. If your loved one recorded a TOD deed with the county recorder before their passing, the property transfers to you simply by filing a death certificate and an affidavit. Kentucky does not currently have a Transfer on Death Deed statute, so this shortcut is not available for Kentucky properties.

The Stepped-Up Basis Rule: Your Most Important Tax Benefit

If there is one piece of tax law every heir should understand, it is the stepped-up basis rule under Internal Revenue Code Section 1014.

Here is how it works: When you inherit a property, your tax basis (the value used to calculate gains or losses when you sell) is not what the deceased originally paid for the house. Instead, your basis is "stepped up" to the fair market value of the property on the date of the decedent's death.

Example: Your parent bought their house in Clark County, Indiana in 1985 for $45,000. At the time of their death in 2026, the home is worth $185,000. Your stepped-up basis is $185,000, not $45,000. If you sell the house for $185,000, your taxable capital gain is zero.

This is an enormous benefit, and it applies to both Indiana and Kentucky properties. But there are important nuances:

• Get a professional appraisal. To establish the stepped-up basis, you need a defensible valuation as of the date of death. Hire a licensed appraiser. This typically costs $300 to $500 and is money well spent.
• The date matters. The longer you wait to sell after the date of death, the more the property's value may change. If the property appreciates significantly between the date of death and the date of sale, you may owe capital gains tax on that appreciation.
• Improvements and depreciation affect basis. If you make improvements to the property after inheriting it, those costs add to your basis. If you rent the property out, depreciation you claim reduces your basis.
• Multiple heirs each get a stepped-up basis proportional to their ownership share.

Capital Gains Tax: What You May Owe

If you sell the inherited property for more than your stepped-up basis, the profit is subject to capital gains tax. Whether it is taxed as short-term or long-term depends on the total holding period.

Under current IRS rules, inherited property is considered to have been held long-term regardless of how long you actually owned it. This means any gain qualifies for the lower long-term capital gains rates of 0%, 15%, or 20%, depending on your income bracket.

State-level capital gains taxes also apply:

• Indiana taxes capital gains as ordinary income at a flat rate of 3.05% (as of 2026, following the phased reduction under HB 1002).
• Kentucky also taxes capital gains as ordinary income at a flat rate of 4% (reduced from 4.5% under recent tax reform legislation).

The state where the property is physically located generally has the right to tax the gain, regardless of where you live.

Your Options: Keep, Rent, or Sell

Once the legal framework is in place, you have several paths forward. Each has distinct advantages and drawbacks.

Option 1: Keep the Property as a Primary Residence

If the inherited house is in a location where you want to live, moving in is a straightforward option. You avoid selling costs entirely, and if you later sell after living in the home for at least two of the five years before the sale, you may qualify for the Section 121 exclusion, which shelters up to $250,000 ($500,000 for married couples) in capital gains from tax.

The downside: you are responsible for all maintenance, property taxes, insurance, and any existing mortgage payments (though most mortgages are assumable by heirs under the Garn-St. Germain Act).

Option 2: Rent the Property

Turning the inherited house into a rental can generate ongoing income and long-term appreciation. However, being a landlord requires either your time or a property manager's fees (typically 8% to 10% of monthly rent). You will also need to understand Indiana or Kentucky landlord-tenant law, handle repairs, and deal with vacancies.

From a tax standpoint, rental income is taxable, but you can deduct expenses including property taxes, insurance, repairs, and depreciation. Be aware that claiming depreciation reduces your stepped-up basis, which affects your eventual capital gains calculation if you sell later.

Option 3: Sell with a Real Estate Agent

Listing the property on the open market with an agent typically produces the highest sale price, especially if the home is in good condition and in a desirable area. The trade-off is time (average days on market varies widely by location and price point) and cost. Agent commissions, closing costs, and any necessary repairs or staging can consume 8% to 10% of the sale price.

This option works best when the property is in good condition, you are not in a hurry, and all heirs agree on the approach.

Option 4: Sell for Cash to a Direct Buyer

A direct cash sale skips the listing process entirely. There are no agent commissions, no staging costs, and no uncertainty about financing falling through. Cash buyers typically close in two to four weeks and purchase properties in as-is condition, meaning you do not need to invest in repairs or cleanouts.

The trade-off is that cash offers are typically below full retail market value. However, when you factor in the savings on commissions, repairs, holding costs (property taxes, insurance, utilities during the listing period), and the time value of receiving your funds weeks instead of months from now, the net difference is often smaller than people expect.

This option is particularly well-suited for inherited properties that need significant work, situations with multiple heirs who want a clean resolution, or cases where the property is far from where the heirs live.

Selling Before vs. After Probate

A common question we hear: can I sell the house before probate is complete?

The short answer in both states is that you generally cannot transfer clear title to a buyer until the personal representative has the legal authority to do so. However, there are important distinctions:

• In Indiana (unsupervised administration): Once the personal representative is appointed and letters testamentary are issued, they typically have immediate authority to list and sell real property. You do not have to wait until probate closes. The 5-month creditor period runs in the background while the sale proceeds.
• In Kentucky: The executor may need to petition the court specifically for authority to sell real estate (KRS 395.195). This can add weeks or months to the timeline. Some Kentucky courts handle these petitions quickly; others do not.

In both states, you can begin marketing the property and negotiating with buyers before you have legal authority to close. Many cash buyers and investors are experienced with probate sales and will structure the purchase agreement with a closing date that accommodates the legal timeline.

Multiple Heirs and Disputes

Inherited property situations involving multiple heirs are among the most complex and emotionally charged real estate transactions. When siblings or other family members co-inherit a house, they must all agree on what to do with it, or one of them must buy out the others.

Common scenarios and how they play out:

• All heirs agree to sell: The simplest case. The personal representative lists or sells the property, and proceeds are divided according to the will or intestacy laws.
• One heir wants to keep the house: That heir can buy out the others at fair market value. This often requires financing or a family agreement on payment terms.
• Heirs cannot agree: This is where things get expensive. In both Indiana and Kentucky, any co-owner can file a partition action (IC 32-17-4 in Indiana; KRS 381.135 in Kentucky) to force a sale or physical division of the property. Partition actions involve court costs, attorney fees, and often result in a below-market forced sale. Everyone loses money in a partition action, so it should be considered a last resort.
• One heir is living in the property: This creates additional complexity. The occupying heir may have been caring for the deceased, may have made improvements, or may simply have nowhere else to go. Indiana and Kentucky courts can consider these factors, but there is no guaranteed right to remain in an inherited property that other heirs want to sell.

If you are one of multiple heirs and tensions are rising, consider engaging a neutral third-party mediator before the situation escalates to litigation. Mediation costs a fraction of what a partition lawsuit does, and it preserves family relationships that court battles destroy.

Timeline Expectations

How long does the entire process take, from inheriting a house to having money from a sale in your bank account? Here are realistic timelines:

Fastest Scenario (Indiana, Transfer on Death Deed or Simple Estate)

1. File death certificate and affidavit with county recorder: 1 to 2 weeks
2. Accept cash offer and close: 2 to 3 weeks
3. Total: 3 to 5 weeks

Typical Scenario (Indiana, Unsupervised Probate, Cash Sale)

1. Open probate and get letters testamentary: 2 to 4 weeks
2. Accept cash offer and close during creditor period: 2 to 4 weeks
3. Creditor period expires, estate closes: 5 months from first publication
4. Total: Property sold in 4 to 8 weeks; estate closes at ~6 months

Typical Scenario (Kentucky, Standard Probate, Agent Listing)

1. Open probate and get appointed: 2 to 6 weeks
2. Petition court for authority to sell (if needed): 2 to 8 weeks
3. List, show, negotiate, and close: 3 to 6 months
4. Estate closes after creditor period and final accounting: 9 to 18 months
5. Total: Property sold in 3 to 8 months; estate closes at 9 to 18 months

Complicated Scenario (Multiple Heirs, Disputes, Out-of-State)

1. All of the above, plus mediation or litigation
2. Total: 12 to 24+ months

Common Mistakes to Avoid

After working with many families navigating inherited property situations, we have seen certain mistakes come up repeatedly. Avoiding these can save you thousands of dollars and months of frustration.

1. Not securing insurance immediately. Most homeowner's policies terminate or become void when the named insured dies. If a pipe bursts or a fire occurs during the gap, you have no coverage. Contact the insurer within days of the death and get a vacancy or estate policy in place.
2. Paying the deceased's debts out of pocket. Heirs are generally not personally liable for the deceased's debts (with narrow exceptions). Debts are paid from the estate, not from your bank account. If the estate does not have enough assets to cover debts, those debts may go unpaid. Consult with a probate attorney before writing any checks.
3. Failing to get a date-of-death appraisal. Without a professional appraisal establishing fair market value at the date of death, you cannot properly calculate your stepped-up basis. If the IRS questions your basis years later, a Zillow estimate will not hold up. Spend the $400 now.
4. Making major improvements before deciding to sell. If you plan to sell the house as-is to a cash buyer, spending $30,000 on a new kitchen does not make financial sense. Understand your selling strategy before investing in the property.
5. Ignoring property taxes and HOA fees. These obligations continue accruing during probate. Unpaid property taxes can lead to tax liens, and HOA fees can compound quickly. Make sure someone is monitoring and paying these bills from estate funds.
6. Trying to handle probate without an attorney. Both Indiana and Kentucky probate involve filing deadlines, notice requirements, and legal formalities that are easy to get wrong. A probate attorney typically costs $2,000 to $5,000 for a straightforward estate, and the cost is paid from estate funds, not your personal money.
7. Not communicating with co-heirs. Silence breeds suspicion. If you are the personal representative, keep all beneficiaries informed of what you are doing and why. Regular updates, even brief ones, prevent the misunderstandings that escalate into legal disputes.
8. Waiting too long to act. A vacant house deteriorates faster than you might expect. Pipes freeze, roofs leak, yards become overgrown, and vandals notice. Every month of inaction adds to your holding costs and reduces the property's value. Have a plan within 30 to 60 days of the death.

Special Situations

Inherited Property with an Existing Mortgage

If the deceased had a mortgage on the property, the loan does not disappear. Under the federal Garn-St. Germain Depository Institutions Act of 1982, lenders cannot invoke a due-on-sale clause when a property transfers to a relative upon the borrower's death. This means you can continue making payments on the existing mortgage without triggering an acceleration of the loan.

However, you are not obligated to continue paying. If the house is worth less than the mortgage balance, you can simply allow the lender to foreclose. This does not affect your personal credit because you did not sign the original loan. You are walking away from the property, not from a personal obligation.

Inherited Property with Tax Liens or Code Violations

In both Indiana and Kentucky, unpaid property taxes and municipal code violations attach to the property, not the person. If you inherit a house with these encumbrances, they will need to be resolved before or at the time of sale. A title search during closing will reveal any liens, and they are typically paid from the sale proceeds. If the liens exceed the property's value, you may need to negotiate with lien holders or consider abandoning the property.

Inherited Property in Poor Condition

Homes that have been neglected, hoarded in, or left vacant for extended periods present unique challenges. Listing with a traditional agent may not be practical if the home cannot pass inspection or qualify for buyer financing. In these cases, selling to a cash buyer who purchases properties in as-is condition is often the most practical path forward.

Working with

We understand that dealing with an inherited property during a time of loss is stressful. Our goal is to make the real estate side of the equation as simple and painless as possible.

If you have inherited a property in Indiana or Kentucky and you are exploring your options, we are happy to provide a no-obligation cash offer. We purchase homes in any condition, handle the cleanout if needed, and can work around your probate timeline. There are no agent commissions, no repair requirements, and no pressure.

Whether you are ready to sell now or just want to understand what the property might be worth, reach out to us at or visit to request your free, confidential offer. We have helped many families navigate inherited property situations, and we are here to help you find the right solution for yours.