What Are Your Options When It Comes To Inherited Real Estate
One question that has come my way lately is what options are available when someone inherits the family home. While the idea of receiving a home from someone seems appealing, this is a tricky and often sensitive occurrence.
For an inheritance to occur, someone has died. Not only is it challenging to know what to do with a large estate like a home, but there are powerful emotions that come during these times. We can feel guilt, loss, remorse, and confusion. And if there are multiple children, even easy decisions can become more challenging.
In light of the sensitive nature of inheritances, here are three options you have when inheriting a house.
Live In It
Your first option is to live in the house you now have.
The family home is a unique gift. Many don’t want to consider parting with their childhood home, and they might not have to.
If the house is mortgage-free or expenses such as repairs or taxes are not too high, moving into an inherited home can be a sound financial decision. You don’t have to pay any capital gains tax on an inherited home if you plan on living in it. Plus, you could put your current home up for sale and find yourself mortgage free!
We’re finding out that many jobs can happen remotely. If you have to move outside of commuting distance, you could still keep your job.
You might not be ready to uproot your life, however, or you love where you live now. In that case, you could…
Rent It Out
Rental properties are an effective way to create passive income and build wealth. Whether you turn the family home into a long-term or vacation rental, you can earn money from your inheritance.
There are costs to consider. Not only will a rental property need upgrades and continued maintenance, but there is also a cost for your time and energy. Finding renters, addressing their concerns, maintaining the home, and more, can all take a significant investment of your resources.
Property managers can oversee all these aspects of renting and repair. If you are okay with seeing some of your monthly earnings go towards a third-party management system, you will still see income coming in.
If moving into the home or renting it out to someone else is not for you, you can sell the house.
Selling may be the best option for many. If the inherited house is mortgage free or close to paid off, selling for a profit, and dividing up the money between siblings or the inheritors, is a good option. Parents want the best for their kids, and if their home can improve your financial future, that would probably make them happy.
Even if the house is underwater (you own more on the mortgage than it’s worth), lenders can make allowances for a short sale. And in slow markets, there are often legitimate buyers looking for deals if you know where to look.
Selling Before Probate
Many people ask if they can sell before probate. Probate is the time between someone’s passing and when the desires expressed in their will become official. During this time, in many states, no one can take ownership of property or inheritances. Probate can take a long time, especially if the estate is large or disputes occur among the children.
There are some states where you can put an inherited house up for sale before probate ends. In most of these cases, possession can’t occur until the will is official. Not all buyers are willing to wait with no end in sight, which could affect the overall price.
If you are interested in discovering more about your options, book a call with me.