Life is weird and the most unexpected things happen. Sometimes, the death of a loved one or family member unexpectedly drops property in your lap that you have no idea what to do with. If you recently inherited a home or property and you’re feeling overwhelmed with the whole process, this guide will shine some light on how to handle inherited property:
When you inherit property, there are several routes you can take. You can:
Sell the property
There are several steps involved with selling inherited property and the whole process can begin to look intimidating. Here, we’ll attempt to make it as simple as possible. The steps involved in selling inherited property are as follows:
1. Gather family members
Reach out to all family members of the deceased that should be involved in the selling process. Determine the named executor or representative of the estate. Make sure you’re all on the same page in regards to selling the property. If they’re not on board with selling, you can; buy them out, rent the property and split landlord responsibilities, hire a mediator to help you come to an agreement or file to partition the house. Of all the options, going to court is the most stressful and least profitable route.
2. Remove personal belongings
Clean out and remove all personal effects that you want to keep from the property. This is usually done in conjunction with #2. If you choose to sell the property as-is, you can leave any remaining furniture, personal belongings, or trash.
3. Determine the condition of the property
The next step is to verify the condition of your inherited property. This will help you to quote a fair market price for the property. Some investors will buy inherited homes as-is meaning you don’t have to renovate or fix anything before closing the sale.
4. Debt against the property
Next you must determine if there are any liens or judgements against the the property. A lien is a claim against the property that is used as collateral to collect debt. A lien or judgement could be from a mortgage, back taxes, a water bill, hospital bills, slip and fall complaints, among other forms of debt. You can determine if there are any liens or judgements against the property by searching through public records or by running a title search. As inheritors of the estate, you are now responsible for paying these debts going forward. Once you determine these amounts, it will enable you to determine how much you’ll actually walk away with after selling the property.
5. After selling
After selling the property, calculate how much you’re required to pay in capital gains tax. Consult with an accountant or attorney to help if you don’t know how to file capital gains tax.
Renovate and rent!
If you do not want to sell your inherited property, another option is to renovate and rent it out. You can decide to manage the property yourself if you are local or hire a property management company.
Live in the property!
As a final option, you can also decide to move into your inherited property yourself. Before doing so, it would be advisable to confirm with the other heirs that they are comfortable with you living in the house. You would also need to put aside funds to cover the taxes, water bills, and repairs among other costs that come along with owning a home. For some people, the property might have some sentimental value and they prefer to live there themselves.