Options For When You Inherit A House

While inheriting a house can be seen as a generous gift, a precious opportunity to improve your financial status or to finally become a property owner, it is also be a challenging moment. Losing a loved one is terrible and now you have decisions to make about the estate and property.

The best way to go through all of it in the least damaging way is to make sure you are well-informed, know your options and able to get help if necessary. This article will help you understand what you should consider before deciding what to do with the property you inherited.

Essentially, you will have to choose one of these three options:

• Move in
• Rent it out
• Sell it

To make the right decision you might want to consider the following:

The Taxes

Depending on what you choose to do with the house, you might or might not have to deal with some tax consequences. Each situation is unique and the laws vary from state to state. So the best advice would be to consult a professional. Contact a local CPA (Certified Public Accountant) and inquire about your options. Ask about the possible results and potential complications of keeping the house, selling it and renting it out. You might also want to learn about the current step-up situation. It is a crucial factor that affects the potential benefit you can get from selling the house.

The Mortgage

It is very much possible that you inherited a house that doesn’t have a mortgage. Then just consider yourself lucky and skip this step. But if there is a mortgage, you want to know all the details that may affect your decision whether to sell the inherited property or not.

Due-on-sale clause

If the house you inherited has a mortgage with a due-on-sale clause you will probably have to pay the full amount of the mortgage or sell the house. However, if you are a family member of the deceased, you usually have an option of just assuming the mortgage payments.

Reverse mortgage

If you inherited a house with a reverse mortgage, it is likely you will have to pay off the loan within a limited period of time (usually around 6 months). You can use your own savings to pay, sell the house and use the money to cover the amount of the mortgage or get a new loan.

The Mortgage Balance is Higher Than What the Property is Worth (Underwater)

If the property has more debts than its value, your best option is to do a short sale .

The Repairs

It’s always a good idea to have the house inspected for any damages. It might be the crucial factor that determines your final decision. Usually repairs cost more than you think and it can take a lot of your time an energy to find a manage a contractor to complete the necessary repairs or updates requires.

Renting out or selling a house require different types of repairs. So, the amount and the nature of the work to be done depends on what you decide to do with the house.

People who want to buy a house are mostly concerned by things that can become issues in the long-term. While potential tenants don’t care what happens to the house in ten years. They want to be comfortable here and now.

If your house has serious damages that you don’t want to or can’t fix yourself, you might also consider selling it to a company that buys houses in need of major repairs .

Other Options

It is very likely you are not the only person who inherited this property. It is great if you all agree on what you should do with the house. But what if you don’t? You still have options.

Sell and split

Might be the easiest and the clearest options. It is just what it sounds like: you sell the house and each beneficiary gets a share of the profit. Fair and square.

Rent and split

Can be a good alternative to selling and splitting. Especially, if now is not the best time to sell, but you don’t want the house to just sit there empty and useless. Although, it creates more opportunities for conflicts among the stakeholders. So it’s not your most desired choice if your relationships with the rest of the heirs are not good.

Buyout

One of the stakeholders can buy out the others’ share of the property. It can be the best solution for some people, but the buyer has to pay the closing costs and an appraisal.

Partition Suit

If you can’t come up with a solution plausible for everyone, you might have to bring it to the court. Filing a suit of partition means you ask the judge to order the sale of the property. As any legal process that involves courts, it can be expensive and time-consuming.

Conclusion

Making a decision about selling, renting out or keeping an inherited house is a very demanding one. Try to make your choice as rational as you can by considering the factors listed in this article.

If you’d like to sell and move on with your life than call us now at 941-212-0535 or fill out the form.