Have you inherited a house? Knowing what to do next can be complicated. When you’re dealing with the emotions that come with taking possession of a home, you want to consider several factors with a clear head before you take action.
Keep reading to learn what you should do with inheritance property!
Investigate the Financial Obligations
Does the property have a mortgage? Knowing the answer to this question may impact how soon or if you decide to sell. If there is an ongoing mortgage, you may have to start making payments right away.
Are there any other outstanding debts associated with the property? Make sure you know the full scope of the property’s financial picture as you and any other heirs make plans. And yes, if you are not the only inheritor of the property, be sure that you are on the same page as everyone else!
Look at the Property’s Tax Situation
Do you have to pay taxes on inherited property? Fortunately, you won’t have federal taxes to worry about, but you will need to check into whether the house is impacted by state estate taxes. This will depend on where you live.
Selling an inherited house means you’d have capital gains or losses taxes to deal with. These taxes reflect any gains (or losses) in the property’s value from the time you inherit it to the time that you sell it.
When in doubt, talk with a financial planner or accountant to make sure that you know the implications of these taxes on your bottom line.
Evaluate the Condition of the Inheritance Property
If the paint’s peeling in the living room, that’s not a significant cost to fix. But if the HVAC system needs a replacement or the roof is caving in, you may have some significant costs on your hands.
Price out the necessary repairs and determine whether it makes more sense to unload the property or keep it. For around $400, you can get a home inspection. This is a valuable tool that can help make your decision easier.
What Will You Do With It?
You have several options to consider. Do you rent or sell? Or do you take up residence in the home?
If you decide to rent the property, make sure you know the ins and outs of acting as a landlord. One advantage to renting is that you may be able to get away with simple cosmetic updates if the house is otherwise safe to live in. A renter might not be there for the long haul, so as long as the property looks decent, you can earn an income stream.
Living in the property or hanging on to it can be to your benefit if you have sentimental attachments or simply want to take your time fixing the place up.
The Bottom Line
Inheritance property can be a blessing or a curse, but the most important place to start is with a full understanding of the property. Make sure that you are clear on the financial picture and can assess the property’s condition. Then you’ll be able to make an informed decision.
When you’re ready to learn more about real estate, check back with us for more great articles!