Inheriting a house can feel like winning the lottery. When inheriting a house, there are a number of difficult emotional and financial decisions to make. The following are the top five things one should know when inheriting a house:
It is advisable not to make quick decisions in the wake of a loved one’s passing. However basic decisions will still need to be made. Eventually, a decision will have to be made on what to do with the inherited house. There are three basic options: sell it, rent it out, or live in it.
An individual currently renting a place will be tempted to move into the inherited house. This however may not work if the house is inherited with siblings or other relatives. Most individuals will not want to live with the others.
That leaves two other possible options. Converting a home into a rental is not a simple matter. Being a landlord can be costly and time consuming. The inherited property may need lots of repairs. The involved individuals may not have the time to commit in doing repairs or managing the property. There are many things to consider in becoming a landlord.
The last option is to sell. The individuals inheriting this property may want the money right away. Cash buyers can offer to buy the inherited property and settle quickly without any hassles or requests for repairs. Keep in mind debt collectors and bills will pile up quickly after inheriting a house. They will want to get paid.
Inheritors should examine the tax breaks. Selling an inherited property, even if it appreciated significantly since the deceased purchased it, will not subject you to capital gains tax. The property’s tax basis is stepped to market value at the date of the death of your loved one. The stepped means that any increase in value over the cost of the inherited property comes to the inheritors tax-free. The house is inherited at the fair market value as of the date of the death. When the property is sold, any tax owed is based only on the increase in value.
Always look into what other taxes may be due. Most will not have to deal with federal estate taxes unless the estate has over five million in assets. The bar for state estate taxes can be much lower. Where the deceased lived can make a big difference in how much you actually get to inherit.
A house with an existing mortgage must be paid off by the estate. This makes the house free and clear of debt. Even without a mortgage, there are other expenses associated with this house. Property taxes, home insurance, liability insurance, electricity, water, gas, and regular maintenance can put a heavy burden on a person’s financial life. These are not a one-time expense; They are ongoing and go with the responsibility of an inherited house.
There are emotional consequences that come in addition to the financial ones in inheriting a house. Dealing with a lot of possessions from an inherited home, such as furniture, household goods, clothes, and electronics can put a lot of burden on inheritors. The burden becomes increasingly difficult when there is other baggage that comes with this house.
All of the inheritors might want the same possessions for sentimental purposes. For example, things like a mother’s wedding ring, father’s class ring, fine china, family heirlooms can create tension and strife within the family.
Moving these items from the home to rent the property can be an emotional experience. Dealing with the loss of a loved one on top of moving their stuff can be a daunting task. This is the reason many cannot bring themselves to clear out the houses they have inherited. Many families are not able to handle the stress that comes with cleaning out an inherited house and as a result do nothing.
If you have an inherited house and want our help, please call us at 240-801-6055 or visit us at http://inheritedpropertycash.nichebuildersite.com/.