Inheriting a house after the passing of a loved one can raise both financial and emotional issues and requires many decisions. You should take your time before deciding what to do. If the inheritance is yours alone, you can live in the house, sell it, or rent it. The decision becomes a little more complicated if you are sharing the inheritance.
Depending on the circumstances of the house and property, you may be responsible for costs such as:
- Federal and/or state taxes
- Second or reverse mortgages
- Upgrading and maintenance
Taxes. Inherited property usually has tax implications. State and/or federal taxes can be substantial and may create a financial burden for those who inherit a house.
Mortgages. Even though your loved one left you the house with the best of intentions, he or she may have left you with a mortgage as well. Reverse mortgages and refinancing may come as a surprise if you thought the house had been paid off.
Upgrading and maintenance. If the house is older, you may have to invest money to upgrade it before you can sell it, rent it, or live in it yourself. If you decide to rent or move in, you’ll have to consider the costs of maintenance, too.
Rent, Sell, or Move in?
If you live nearby and the house is yours alone, renting might be a good option. Becoming a landlord can be more difficult if you live far away or are sharing the inheritance. You may want to hire a property management company to help you evaluate the condition of the house and to sort through issues surrounding rentals in the area.
Selling the house may be the best option if you don’t live nearby or if you are sharing it. Get advice from a trusted real estate professional in the area so you can have the house appraised properly. By selling the house, you’ll be able to pay off any outstanding taxes and/or mortgage.
If you’ve inherited the house yourself, moving in might make perfect sense. If you’re sharing the inheritance, you’ll have to iron out the details with the others.
The Emotional Aspects of Inheriting a House
When you inherit a house, you don’t just inherit a structure—you inherit all the emotions and sentiments attached to it. Under these circumstances, it can be very difficult to make objective decisions. The hardest part is disposing of the furniture and personal belongings. If you decide to sell the house, everything must be donated, sold, or given to family or friends. This can be very stressful for family members. Everyone attaches different memories to people, places, and things. Now is a good time to be patient and to have open conversations with family members.
When you inherit a house, it might be a good idea to seek professional guidance from real estate professionals who understand all the details involved and can think objectively at this difficult time.