Losing a beloved family member can make for a difficult time for you and your loved ones. Aside from saying your final goodbyes, you must handle their final affairs too.
For some people that means dealing with an estate or inherited home. This might mean you’ve inherited the home you grew up in or a beloved vacation home. It might also mean you’ve inherited Uncle Fred’s less than stellar unkempt home. Whether you’re thrilled about the inheritance and overwhelmed with what you should do with this house, you have to make decisions.
There are some important considerations before you decide whether to sell or keep the home. In many cases, those decisions go way beyond your emotional attachment, or lack of it, to a property. Often, there are significant financial implications to consider when you inherit a home.
If you’ve inherited a home, you want to make smart choices related to the inheritance and may need help considering what to do with it.
Read on to learn more about what you should consider when you have an inherited home to handle.
Once you inherit a home, you have some big decisions to make. It’s important that your know you options and consider how each option will impact you financially.
You can, of course, choose to live in the house. For most people though, they already have a home. Maybe you don’t even live in the same town as the house you’ve inherited. While there might be sentimental reasons to want to live in the home you’ve inherited, it might not be realistic.
You could opt to rent the home. If the property is a vacation location, this might seem like a good idea. The positive is potential rental revenue from the property. But you want to consider if you want to take on being a landlord, especially if the property needs work or is in another town from you.
The final option is to sell the home. For some people, this might be a hard choice emotionally, yet the easiest option. There are some financial implications to choosing to sell, if that’s the route you take.
Before you decide what to do with the inherited house, you’ll want to do your homework and learn some things about the house. Here are some things you need to know.
One of the first things you need to learn is if there are any mortgages or outstanding loans connected to the home. Often a home that is passed through a will has been with the deceased for a long time and is already paid off. But you shouldn’t assume there is no debt connected to the home.
Check to see if there is a mortgage, home equity line of credit, or a home equity loan connected to the property. If there is some type of loan, often the lenders will expect you to continue making those payments. This is your first financial hurdle.
Contact them right away so they are aware of the situation. Sometimes, they will even temporarily pause payments due while you figure out what to do with the property.
If the house has a mortgage and you plan to keep the home, you’ll need to refinance so the mortgage is in your name.
Even if you intend to sell the property, you want to make sure you keep insurance up to date until the sale. This is especially important if the property is empty. You don’t know what could happen to it and want it insured until you make decisions.
Likewise, the property will continue to have property insurance due on it. If there isn’t a mortgage, that probably will need to be paid semi-annually. Check with your local municipality on your property tax obligations and prepare for those as you decide what to do.
If you’re already a homeowner, you know that a house needs regular maintenance.
Hopefully, you’ve inherited one where the maintenance is up to date. If not, you need to consider what it will take to get it fixed up to live in or to sell.
There is regular routine maintenance to consider too while you figure all this out. The lawn will need mowing, for example.
Often all the maintenance needs are the reasons some people choose the sell my house as is cash option.
As the inheritor, there are some tax issues you’ll have to consider. There are three types of taxes you may have to address.
This is probably one of the most important considerations as you decide what to do with the house.
Some states require you to pay an inheritance tax on the property you inherit. You’ll want to research your state’s laws. If you live in Pennsylvania, you’ll need to check with the PA Department of Revenue regarding inheritance tax. Some states also have an estate tax. This will vary depending on how the inherited home was passed to you and the state in which you live. You’ll likely need to go through probate to figure out the estate tax implications.
There are also capital gains taxes. These are the taxes you’d pay to the federal government if you opt to sell the inherited home and it’s not your permanent residence.
One option to lower your capital gains implications is to sell quickly. From the day you inherit the home, the fair market value of the house is considered. If you sell it for anything more than that fair market value, you pay the capital gains tax on that amount.
If you opt to hold onto the house, make improvements, then sell it, you are increasing its value. You will likely pay more in capital gains taxes.
In the end, many people who have an inherited home opt to sell it and they want to do it quickly because of all the responsibility it brings.
If you hire a realtor, often they will encourage repairs and maintenance before listing the home. You also have to pay them their commission rate.
More and more people are opting to sell the house fast for cash. First Choice Home Buyers is a company that will make a fair cash offer and you can sell the inherited home quickly and with little hassle.
Losing a loved one is hard. Dealing with an inherited home and deciding the best route for that home going forward can feel overwhelming. Many people choose the sell my house as is for cash option because it’s the fastest and easiest way to move on from the loss.