You Inherited a House- Now What?

Inheriting real estate is a long standing event that even when those who are inheriting the property expect to acquire the home there are still some decisions to be made, both financial as well as emotional. If you grew up in the home there are memories there and if you sell the property there are some financial consequences as well. Let’s look at what happens when you inherit a home.

Sell It. This is perhaps the most common option at some point, especially if there are other siblings involved who are also new owners. The proceeds of the sale are split between the siblings and most often avoid capital gains taxes due to what is known as a “step-up.” This means the value of the home is the fair market value of the property upon the death of the parents. If you’re the sole inheritor and you decide to sell, there may also be other liens attached such as property taxes. If there is a mortgage, you will pay off the mortgage during the settlement process and your net proceeds will be the difference between the sales price less liens less closing costs.

Rent It. If you’re not sure if you want to sell or not you can rent it out. This provides a nice monthly cash flow you can pocket while the property continues to appreciate. This might not work however if the property is located somewhere relatively far away that would keep you from properly managing the home. You’ll need to find a tenant, collect the rent and maintain the home. If you are somewhat long-distance and still want to rent it out, you can always contact a property manager who will do these tasks for you.

Move In. Finally, you can simply move in. If you’re currently renting you can move into the inherited property and only have to pay the property taxes, insurance and maintenance.  If there is a mortgage and you’re a close relative federal law keeps the lender from enforcing the due-on-clause as long as you live in the property and continue to make the mortgage payments.

For more information or questions about mortgage loans,
Please visit Majestic Home Loan

Or Call  (855) 757-8748

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