You just got some bittersweet news – a close relative has passed away, and they decided to leave you their home in their Will. Whether it’s a parent, a grandparent, or even a beloved aunt or an uncle, their house is now legally yours – but what in the world are you supposed to do with it?
It’s a difficult choice to be sure. Deciding what you’re going to do with this sudden piece of real estate in your hands could have unforeseen consequences like financial concerns or possibly even a rift in your family. Here’s what you need to know about your options when it comes to an inherited house.
Don’t Forget About the Tax Man
Unless the person who left you the house was incredibly well off, you might not necessarily have to worry about estate tax. In fact, the exemption is so high as to be astronomical – more than $5 million – so guess what? Unless your new home is valued at more than that, you won’t have to pay estate taxes on it. This is an excellent advantage, but it is one you need to keep in mind. If you’re unsure of whether you’re going to be exempt from estate tax, contact a tax professional immediately – and definitely before you decide to sell the home or not.
Take a Long, Hard Look at the Mortgage
If you’re lucky, you may end up inheriting a house that’s already been paid for in full. However, it might not be – if it’s a second home, a vacation property, or even a retirement cottage, there’s a chance there’s still some principal left on the house’s mortgage. Additionally, if your relative took out a reverse mortgage, you’ve got that to contend with as well. If you’re going to be taking up residence in the home you can also take up the existing mortgage on the house. However, if you’re going to be turning it into an income property you’ll likely need to refinance the home yourself. Likewise, you can’t assume a reverse mortgage if you inherit the house. If you have the liquidity, you can pay off the mortgage yourself. If you don’t, you may want to consider selling the home to free yourself from this unexpected financial burden.
Talk Things Over with Your Relatives
In some cases, there can be disagreements among other relatives when it comes to the disposition of your home. If you’re the only one named in the will as the inheritor this isn’t an issue, but if for example your parents leave the house to you and a sibling as a joint inheritance, you can’t exactly act unless everyone named as a beneficiary is in agreement. You can, if you truly feel the need to do so, force the property into sale. However, this can ruin relationships – often permanently – so you need to ensure that everyone involved in the new ownership of the home comes to an agreement unless you want to destroy your family. A good idea may be to turn the house into a vacation home that can be used jointly by everyone involved and simply splitting the cost of ownership down the middle, much in the same way that you would treat a time share.
Cash Out
Finally, keep in mind that there’s a quick and easy way to dispose of a house you’ve inherited but you don’t really want – especially if the state of the house is too much for you to handle. You can sell your inherited property by enlisting the aid of a cash buyer. These real estate solution providers like Texas Ideal Properties will often accept your house on an “as-is” basis, meaning you won’t have to prepare the house for sale if it’s been neglected in the past due to an inability on the part of the previous owner. If you’re the sole inheritor but you simply can’t take on the responsibility of home ownership, selling as-is can be an excellent option.
These are just a few things you need to keep in mind when it comes to inheriting a house from a deceased family member. There are of course countless other things that can come up, but if you work together with your family and consult an experienced tax or estate lawyer, you can steer clear of most trouble.