So, you’ve recently inherited a house. Congratulations! However, many inheritances come with strings attached that can impact you for years to come – especially if your inheritance takes the form of a house. From taxes to maintenance, renter troubles and more, owning a home that you’ve inherited can be disruptive and expensive at the same time.
Before you take on that house for yourself (whether to live in it or to rent it out) you should know what you’re getting into. Below are some of the scenarios that people regularly deal with when they inherit a home, and some suggestions for how you can proceed.
A Few Scenarios
The House Is Unoccupied, But In Poor Condition
Often, elderly people and people suffering from chronic conditions find home maintenance to be very challenging. In the final years of their life, many lose the ability to perform even basic home cleaning and maintenance, let alone home improvements. And many living on a fixed income may be reluctant to hire a handyman to help.
In other words, the house you’ve inherited may have serious maintenance problems. From rotten wood to roof leaks, mold and mildew to leaky plumbing, old homes that have fallen into disrepair often require investments of thousands of dollars. Some maintenance problems in older homes are so serious that they can lead to structural issues that require even more repair in order to bring the home back to livable condition.
The House Is Being Rented by Nightmare Tenants
Sometimes, when an older person moves out of their house into a nursing home, assisted living facility, or into a home with a relative, they choose to rent their original home to tenants. While renting can produce income, renting can also be a challenge in its own way. Not all tenants are easy to deal with, and many states have complex laws that are designed to protect renters.
As a landlord, you’ll be required to keep up with the property for your renters. Any maintenance problems must be addressed in order to keep the home livable.
What Are Your Options?
If you’ve just inherited a home (no matter what its condition or who is living in it) know that you have some options. Knowing those options, and all of the pros and cons, can help you decide which one is right for you.
Move In
Know the condition of the home you’re thinking about moving into. Get a home inspection from a reputable inspector, then get a price quote for any repairs that will need to be addressed right away.
Address any structural issues or mold and mildew before you move in. While you may decide to make some repairs after occupying the house, maintenance problems that could affect your indoor air quality or the home’s structural integrity should be addressed before you occupy the house.
Consult with an accountant. Moving into the house and making it your primary residence can exclude you from capital gains tax, but you’ll want to consult with an expert before making any decisions. If you share your inheritance with your siblings, you may also need to pay them for their share. Consult with an attorney to write out an agreement. Doing it this way will ensure that you’ll be protected if you should ever end up in a disagreement with your siblings.
Pros:
- You’ll have a new place to live without the hassle of shopping for a house.
Cons:
- You may have to pay capital gains unless you make the home your primary residence.
- Your new home may need maintenance and repair before it’s livable.
Rent It Out
If you’ve just inherited a rental home that’s occupied by tenants who make life difficult, start by reviewing the lease agreement and consulting with an attorney. Knowing your rights as a landlord can help you get out of a difficult situation with your tenants. If you decide to become a landlord and bring on new tenants, you’ll need a good lease agreement document. You’ll also need to know your rights and obligations as a landlord. Hire a good property management company (unless you feel up to the task of maintaining the rental home).
Pros:
- Rental homes produce income.
Cons:
- Rental homes cost money in home repairs.
- You’ll need to consult with and pay a lawyer, accountant and property management company.
Sell It
Selling the home brings in money and enables you to enjoy your inheritance in the form of an influx of cash. The faster you sell the home, the less money you’ll have to pay on maintenance, taxes, utility bills and more. A quick turnaround is often best. While you may be able to increase profits by repairing the house, selling as-is to an investor is easy and clean.
Find a reputable and ethical investor to get the most for your property. All-cash purchases are faster than financed purchases. Hold an estate sale before finalizing the home’s sale to clear out personal belongings. Done right, you can turn the house around in a matter of weeks. Consult with an accountant to find out what your tax liability will be at tax time.
Pros:
- You’ll make money quickly.
- Selling enables you to move on with your normal life after the death of your loved one.
Cons:
- Once the home is sold, any future investment in the home becomes impossible.
Selling an Inherited Home? Contact Heart Acquisitions
If you’re selling an inherited home in Hilton Head or Bluffton, contact Heart Acquisitions. We work with home owners like you who just need to sell their newly inherited homes as quickly as possible. As ethical, reputable investors in Bluffton, we’ll help you through the home sale process.