If you have recently inherited a property, or you think that you may have an inherited property in the future, it is important to understand what your options are in regards to the home. It can actually be a much more complicated issue than many people realize. What are some of the key considerations associated with an inherited property and what you should do with it?
What are the tax considerations in my state?
If you are inheriting a home, you may be subject to an inheritance tax depending on what state you live it. New Jersey, for instance charges two taxes – an inheritance tax of 16% and an estate tax of 16%. That is quite a heavy financial burden to incur. If you live in the St. Louis or St. Charles area, however, there is good news in that the state of Missouri does not enforce an inheritance tax. So you will not need to worry about a tax being imposed on your inherited property.
Do you need the home yourself?
If you are living in an apartment or some other type of rental property, then inheriting a home might be a wonderful thing. You can move out of your rental and into a home that you now own. But what if you already own a home that you do not plan to move out of? Even if the home you are inheriting is completely paid off and does not have a mortgage associated with it, you will now have to pay homeowners insurance for two properties. You will have to maintain two properties in terms of repairs, landscaping, and other upkeep. And you will be responsible for utility costs for two homes now. This additional expense and responsibility will add up quickly.
Are you the only inheritor?
Factors like inheritance tax considerations and whether or not you already have a home are particularly important if you are the only person inheriting a property, but what if you are sharing the inheritance with siblings or someone else?
If that is the case, then you will all need to reach a consensus on what you are going to do with the home. The most likely answer will be to sell the home, because it is doubtful that the entire group will be satisfied with one person keeping it. If that is the direction you are taking, then there will be a debate regarding how to sell the home. Are you collectively in a hurry, or are you all comfortable waiting out the process?
If you are working with a real estate agent to sell the home to an individual, then there will be the matter of expenses associated with getting the home ready to sell. The agent themselves will need to get a commission, and there will be costs needed to stage the home for sale. There may also be repairs associated with the home in order to sell it. This could be as simple as paying to have the home repainted or other minor issues. Or it could be a more significant, expensive item, like repairing a roof, a driveway, or dealing with mold.
In these cases, who will cover these expenses? Is there a provision in the estate to cover them or will it come out of you and your family’s pockets?
Is the home near you?
Even though you live in the greater St. Louis area, your inherited property could be in another city or even another state altogether. In that case, everything we have discussed here thus far becomes all the more difficult, and the urgency to sell becomes even more heightened.
In many cases, it is simply better to sell the inherited property as-is. You can avoid many of the inconveniences and stressors mentioned here, such as:
- Maintaining two homes
- Paying utility expenses for two residences
- Costs associated with repairs
- Time needed to sell the home to an individual or family
- Real estate agent fees
There will be no repair costs or staging expenses to worry about. And the timeline will be quick as well, providing you with fast cash for your inherited property. If you are interested in learning more about how an as-is sale can help with your inherited property, contact FasterHouse today by calling 314-926-0660 or fill out this form.