The death of a loved one can be a very sad and distressing time indeed. It can cause great upheaval in your family life, and you might be left with lots of things to sort out. One thing that the next of kin often have to deal with is an inherited property.
You might think that inheriting a house or apartment is as easy as it passing over to you and changing the name on the deeds. Unfortunately, though, this process isn’t always that simple. There are often things you need to see to in a specific frame of time. Not only that, though, but you need to figure out exactly what you are going to do with your new property.
If you’ve recently come into possession of a new home through inheritance, you should read on. Here’s my complete guide to what happens next!
There are some instances when more than one person inherits the property. This is often the case with siblings. Their parents might leave their family home to all of their children, for instance. In this case, the children will each have an equal stake in the property, unless otherwise stated in the will. This can be difficult, as each child might have different ideas as to what to do with the property. One might want to sell while others might want to use it for themselves. Usually, though, if one individual wants to live in the house while the others are more interested in selling, then it is possible to buy out the other parties who have inherited a stake in the property. So, if you inherit a house with your siblings and you are the only one interested in it, you will need to pay each other sibling however much their stake is worth. That way, you can buy them out and claim complete ownership of the house.
Pay Inheritance Tax
You also need to remember that there could be an inheritance tax to pay on the property. This can often be quite expensive, especially on large real estate that is worth a lot. However, you should remember that the exact inheritance tax amount will depend on the state in which you live. For instance, if you are in the states of Oregon or Massachusetts, then you won’t pay any inheritance tax unless the property is worth more than $1 million. This is very different to the state of New Jersey, where you can expect to pay taxes on properties worth more than $675,000. Thankfully, though, there often isn’t too much of a rush.
Take Charge Of The Mortgage
The inheritance tax might not be the only financial burden you are faced with when you inherit a house after a relative’s passing. If they had not yet paid off their mortgage, then that will pass onto whoever inherits the property. Unfortunately, this debt isn’t one that dies with the debtor. Sometimes, though, if the deceased has left a considerable amount of savings to the same person who inherits the house, then these are used to pay off the mortgage. If not, then you will have to take charge of the monthly repayments. Of course, if this is a large expense for you, then it could dictate what you do with your new property.
Carry Out Maintenance
If you inherit a property that is in disrepair, you should take care of all the maintenance and repairs as soon as possible. It’s especially important to see to all the maintenance if you are going to leave the property empty for a while to get things sorted. An empty house or apartment can quickly become quite shabby when it doesn’t get the upkeep it needs. You will also find that an empty house is constantly cold, which can increase the risk of it developing rising damp. So, if you know that your inherited property is prone to damp and mold, then take the steps needed to prevent it developing while you aren’t living in the home. You should also contact maplewoodplumbing.com/ so that they can protect the house’s pipes. This is really important if the home will be empty during cold weather, as pipes have a tendency to freeze and burst in freezing temperatures. Carrying out important maintenance can also help to get the property in order for the next step!
Sell, Rent, Or Move In?
Next, you need to figure out what you are going to do with the property. You have three options: sell it, rent it out, move in. Not sure which one is the best for you? Here are the pros and cons of each option.
Pros of selling
- You get an instant lump sum of cash that you can use however you want.
- You can quickly get rid of the property, which you might want to do if you already have a second home and can’t be bothered managing a second property.
Cons of selling
- You might need to spend quite a bit of time doing up the house so you can increase its value and get as much money for it as possible.
- If this was your family home, there might be quite a bit of sentimental value to the property and parting with it could prove to be upsetting.
- This can end up being quite expensive as you will need to pay real estate agent fees and other legal costs associated with selling a property.
Pros of renting
- You will get a regular monthly income.
- This can easily be turned into a business.
- You can choose whether you take on long-term or short-term tenants, so you can rent in a way that suits you.
- You can sell the property at a later date if you get sick of renting or it doesn’t work out for another reason.
- You can always hire a housing agency, such as vacationrentalagent.com/ to take care of your rental property for you. They will find tenants and see to all their maintenance and repairs.
Cons of renting
- You will become a landlord and will still be responsible for household maintenance even if you aren’t living in the property.
- You might end up with some bad tenants. For instance, they might always pay their rent late or they might completely trash the property. Unfortunately, because of many renters’ rights, it can be quite difficult evicting nightmare tenants.
- You might find it difficult to find any tenants and your house could be left empty for a few months, during which time it won’t be making you any money.
- Hiring a housing agency to look after your rental property can turn out very expensive indeed and you might not make a big profit from your rental income.
Pros of moving in
- You get to keep your childhood home in your family.
- If you have been renting, you can now move into your very own place. Hopefully, mortgage free!
- If the property is bigger than where you are living now, you can upsize without paying for a larger house
Cons of moving in
- Your childhood home might not be filled with just happy memories - you might be reminded of some upsetting times from your childhood once you move in.
- If the house is particularly old, it might require a lot of maintenance work and decorating.
- You might need to argue your right to move into the home if you inherit it alongside your siblings.
Inheriting A House With Tenants
If the deceased was renting out their house to some tenants at the time of their death, then there is a good chance that these tenants will still be in the home. If you had already decided to rent out the property, then this shouldn’t be a big deal. You will just become their new landlord. However, if you were hoping to sell the house or move in yourself, then you might have a bit of a fight on your hands. If you want the tenants to go, then you will need to double check their tenancy agreement. There will be a specific notice period that you will need to give them to allow them chance to find a new place. This can be anywhere between one and six months. However, you also need a very good reason why you need them to move out. Thankfully, the landlord moving in is often good enough. Don’t forget, though, you might be able to sell the property to a new landlord with the tenants remaining in it. This could be beneficial to both you and the current tenants.
More often than not, the majority of people will be aware if someone has left them a property in a will before the day of the will reading. If you don’t know that you are named in a will, then finding out you are now the owner of a property is often a nice surprise! But remember that it comes with all the above responsibilities and some tough decisions that you need to make!