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Here's What to Do if You're Inheriting a House
Inheriting a house often happens quickly and by surprise. You realize it will happen eventually, but many people are still unprepared when it does. Our real estate agents have worked with many people in this situation, and while it may be emotionally difficult, successfully navigating these circumstances is possible.
First Steps
Contact the homeowner's insurance and utilities to make any changes needed to continue coverage and service. While you may not want to pay utility bills for a house that isn't occupied, turning them off isn't practical. If you or others will be spending time in the house cleaning out personal belongings or making repairs, you will need electricity and water. During heating season, gas will need to stay on to prevent possible damage from frozen pipes. You'll also need the utilities on for a house inspection. You can discontinue anything that isn't essential such as TV, internet and phone services.
Decide What to Do With the House
In this situation you have three options:
- Sell it
- Move in
- Rent it
There are pros and cons to each situation. It's generally better to make the decision sooner than later to lessen financial and emotional stress. You'll likely want to consult an accountant, lawyer, real estate agent, or other professionals to determine the best option. If you've inherited the property with others, you'll all need to be in agreement about how to proceed.
-
Sell it
In many cases, the people involved already have their own residences and don't need to keep the house. After the sale, everyone gets some of the profits. Selling is a good option if money is needed for other debts, the house has increased greatly in value, or is in a desirable neighborhood. The house is inherited at fair market value, which means capital gains tax savings if you sell soon. Any real estate agent you consult with should provide comps and offer advice about how to prepare the home for market. You may want to get a home inspection to avoid any surprises. -
Move in
If you or a sibling plan on moving into the home, that can allow extra time to go through personal belongings and make repairs. Your property taxes will increase because the home is reassessed at the current market value, and you'll lose any tax breaks if you don't qualify for them yourself. If others have inherited the house with you, they'll need to be compensated for their share. This option may provide some financial security and help if you've had problems qualifying for a mortgage. If the home becomes your primary residence, and you decide to sell several years down the road, you may be able to avoid capital gains tax, netting you more profit from the sale when it does happen. -
Rent it
This option can generate income and provide tax breaks, but do your research and know what you're getting into, since it isn't always the best business decision. Vacation rentals are only popular in some areas so it's not an option for everyone, but you can still offer it as a regular rental. You will need to get landlord's insurance and a home inspection so you can correct any problems to prevent lawsuits. You may have higher maintenance costs in this scenario, and if you need to hire professional property management to take care of renting it out, keep those costs in mind.
No matter what kind of situation you have that causes a need to sell your home or a loved one's home, Laffey Real Estate can help. Contact us today for a consultation.
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