Here’s What To Do If You Inherit a House
Real estate is a valuable investment almost anywhere you go, so inheriting a property can have a significant positive impact on your finances. However, if you are not prepared, it also can strain your resources. Houses are not cheap.
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While not all inherited properties come with mortgages, they do all come with some sort of expense. Utilities, property taxes, upkeep and maintenance are all costs you will have to factor in if you are set to receive an inherited home.
There are several things to consider when inheriting a home, including whether you want to live in it and how you are going to pay for it. From getting the deed changed to preparing for taxes, there is a long list of stuff that should get done before you accept the keys. To ensure that you don’t end up in a money pit, you need to do your research and follow these five steps.
Also see how debt is handled in an inheritance.
Make a Plan
When you find out that you are set to inherit a property, you have three options. You can move into the home, you can sell the home or you can rent it. If you are inheriting the house with others, you need to speak to them and arrive at an agreement on how to move forward.
Inheriting a house is often more complicated when more people are involved. If you and the people you are inheriting the house with do not agree, there may be a number of options on how to handle it. For instance, you may want to consider a buyout from or to the other party. You also can decide to sell the house or rent it and split the profits.
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Meet with a Professional
The average price of a home in the United States was $348,079 in 2022, according to The Zebra, an insurance comparison site. For most people, a house is the largest asset they own. It also can be the most significant source of debt.
Unless the home you inherit is paid off, you will have to prepare for the financial burden of another mortgage. Even if there is no mortgage, there may be additional costs that you will need to factor into your budget.
A professional can help you understand what an inherited home may mean to your bottom line. A pro can research whether the property has any liens against it and can help anticipate what the cost of the house will be each month. The expert also can review the pros and cons of keeping the house, renting it or selling it. The more information you are armed with, the better decision you can make in the long run.
Consider the Tax Implications
One of the biggest things to consider when inheriting a home is the tax implications. Depending on what you do with the property, you could have to pay taxes on capital gains. In certain states, you may have to pay inheritance or estate taxes. A financial advisor can help you understand your rights and responsibilities.
Prepare Financially
Once you have all of the information you need to decide what you are going to do with the newly inherited property, you will want to prepare financially. If you are going to sell or rent the home, you will want to budget for additional taxes.
If you are going to stay in the home, you will need to decide how you will cover the mortgage and the cost of maintaining the property. Planning ahead can help ensure that you aren’t left penniless.
Call the Movers
Once the legal side of things has cleared, generally through probate court, you can start the moving process. If you are keeping the house as your primary residence, you might need to sell or rent your current property. If you are hoping to rent the home, you will need to clear out any clutter and make necessary repairs. Or, if you decide to sell the property, you will want to meet with a qualified Realtor to see what needs to be done before you put it on the market.
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This article originally appeared on GOBankingRates.com: Here’s What To Do If You Inherit a House
