In the aftermath of someone dying, there are also inheritances to worry about. For some, an inherited house becomes something that they need to think about.
Are you inheriting a house with siblings or inheriting a house with a mortgage? These situations can feel complicated and frustrating.
Are you interested in selling an inherited house? That too requires you to know what you’re doing.
Don’t worry: here are our best tips so you can decide what you want to do with your inherited house.
Rent, Live In, or Sell: The Choice Is Yours
First, you need to make a decision. Do you want to rent the home, live in it, or sell it?
In some cases, you may be able to rent out the inherited house. You may not even want to rent a home, though. It may be easier to live in the inherited house while you settle all estate affairs.
Then again, we buy houses with cash, so selling is always an option too.
There are still so many other things to consider when it comes to an inherited home.
What Happens If You Inherit a Mortgage?
If there is an existing mortgage, then you do need to pay it. If you don’t, then you risk foreclosure. If the inherited home is foreclosed, you won’t receive any money for it.
You will want to make sure that any outstanding charges for the home loan are paid for. Make sure you check the title of the home to find out who the lender is. Then, contact them to verify how much is left on the home’s mortgage.
If you sell the home, you can forgo the mortgage. If you rent the home out, then you receive rent payments, which you can put towards the home mortgage.
Selling an Inherited House and Capital Gains Taxes
If you choose to sell the house, then you may encounter capital gains taxes.
These are federal taxes you pay when you sell assets, such as the home, and gain a profit from it. The value of the home will be determined based on the current market price, not the price the home originally sold for.
Capital gains taxes depend on if it is short term vs long term, among other factors.
Inherited House Taxes?
The good news is there is no inheritance tax at the federal level.
The bad news is that six states in the U.S. do have state-level inheritance taxes: Pennsylvania, New Jersey, Maryland, Iowa, Kentucky, and Nebraska.
The more related you are to the deceased homeowner, the less you will likely pay for these state-level inheritance taxes. If you are not related, however, you could be looking at a hefty one.
Deciding What to Do with an Inherited House
An inherited house can have its perks, but ultimately you need to decide what you want to do with it. Take into account any taxes or mortgages you would have to pay while owning the property.
Do you need more legal advice when it comes to estate inheritance or other topics? Check out the rest of our website for more!