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I’ve inherited a house….now what?
It’s a question many face when they suddenly inherit a house without any prior knowledge on the situation. In this article, I will inform you of everything you need to consider if you’ve inherited a house.
Inheriting a house can be a fortune for some and a headache for others. There are several things you can do when you’ve inherited a house – move in, sell it, or rent it.
But there are also many other implications you might have to consider, such as inheriting a house with a mortgage, paying taxes on an inherited house and tax implications.
But don’t worry. Everything you need to know about inheriting a house is explained below, including what happens if you inherit a property with a mortgage, and any tax implications you might face.
First off, you need to decide whether you want to sell, rent it, or move in when you’ve inherited a house. If you don’t wish to do anything with the property, you can also disclaim it – scroll to the bottom to find out how to disclaim your inherited property.
Does the deceased have a valid will? Are you fully aware of everything the deceased is offering? If you’re not sure how to proceed, it’s always best to consult with a professional.
What you should know: If the estate is worth more than $100,000, the court will start a probate to make sure all debts are paid and everything is distributed as it should be. Having a will does not avoid the probate process.
If the will is not valid, the court will follow the state laws of intestacy.
When deciding to sell your inherited house, here are the first steps you need to take:
Does the house need an upgrade to up the value? Are there some improvements you need to make? Does the exterminator need to be called? Make an inventory of all items and note down all problems that need fixing. Then, get in touch with all necessary professionals that will help you sell your house and give you the best quote. Please note that in most cases, especially when dealing with real estate agents, this could take months, depending on the state of your house.
Do you wish to sell your house FAST to a cash buyer? Give me a call and I’ll give you a quote in just 24 hours – we are happy to accept houses that need repairs.
Inheriting a house with a mortgage instantly brings up a lot of questions that sometimes remain unanswered and resolve in long-term complications. Here’s what you should know:
A house with a mortgage can be inherited just like any other property.
What you need to do is make arrangements to pay off the mortgage and look into property taxes.If you’re inheriting your parent’s home you MUST live in the home and make required payments, however, if you intend to assume the mortgage, you can also keep it in the deceased relative’s name.
Make sure you consult your lawyers and financial planners – find any other implications that come with inheriting a house with a mortgage in your country.
Selling you’ve inherited a house can mean that you will most likely have to pay income taxes if you made a profit while a loss during the sale could mean a tax deduction. There are plenty of tax implications that can come with an inherited house, so make sure to read the fine print carefully and always consult with your financial and tax adviser.
“The higher the basis, the lower your taxable gain from the sale.” states LegalZoom.
To put it in simpler words:
[property value] – [your purchase] = taxable gain
Different rules might apply due to the inheritance tax.
So yes, you do have to pay taxes when you inherit or sell your home. In the case of a sale, you need to use the same calculated method as above to discover your tax gain or loss and then report the sale on IRS Schedule D as well as your 1040 tax return – please note that this form needs to be used in the year you sell your home.
There are several reasons why someone might not want to do anything with their inherited house – not even bother with the process of selling it.
Reasons to disclaim an inherited property:
Inherited property disclaimer requirements:
Becoming a landlord comes with plenty of responsibilities. Make sure you read my articles on renting a property to get all necessary information on renting an inherited home.
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