Tips for Inheriting Property

by Ellen Johnson 02/15/2021

Image by Annalise Batista from Pixabay

One of the basic things that people prepare for in their end of life planning is their property. A family home, for example, is often passed down to the couple's children or next of kin. Often, though, the people who inherit the property don't think about what they'll do with the home once that happens. 

If you've inherited a property but there are no advanced directives attached, there are a few options.

Options for an Inherited Property

Every family is different. If the property has been lefts to siblings or multiple family members equally, you'll need to be in agreement as to how the property is managed. Ideally, all parties will reach an amicable agreement but you can also enter into mediation to make sure everyone's best interest is met and the asset is fairly divided.

The state of the home at the time you inherit it is an important factor. There may still be a mortgage or a reverse mortgage on the home, and those payments will need to be taken up immediately. 

There are three basic options for an inherited property:

  • Sell It. Selling the property can make the most sense when there are multiple beneficiaries. The taxes are often minimal because there's a step-up tax on inherited properties, which means that the property is valued at what it's worth when you inherit, not what it was worth when your parents purchased it. If you've decided to sell, you want to assess the house and make any repairs necessary or decide to sell as is. The second option will often mean that the home will sell for less than is possible in the market, but that may be a better option if the repairs are extensive. Once the house sells, the siblings can divide the total amount and the process is complete.
  • Move In. Sometimes one of the siblings would like to move into the family home as their residence. This means that the new owner needs to pay the other beneficiaries for their portion of the estate. There are different ways that you can finance this — through a traditional mortgage or through private payments to the other beneficiaries. You'll need to assess the house to determine fair value at the time of the transaction so that all parties receive their fair share.
  • Rent It. Some people prefer to keep their family home in the family but all the siblings have their own residence. You might choose to rent it out as an investment property. This will mean managing the property for repairs and the work entailed in finding renters. This option can be an excellent way to generate income, while paying monthly bills associated with the property.

An inherited property can offer a great blessing in financial gain, but it can also be a good deal of work. If your decision is to keep or rent out the property, make sure all parties are on board for the level of commitment that means to save yourself from tension in the future.

About the Author
Author

Ellen Johnson

 

I am a longtime time resident of Plymouth, I started my love of the area as a summer resident who was lucky enough to spend summers at the beautiful Priscilla Beach. I am a successful business owner who owned the first salon and day spa in Plymouth. I sold that business and started a highly successful women's clothing and accessory store also located in Plymouth.  My love of the area and real estate brought me to a new chapter in my life full time real estate sales.

Leveraging my experience as a business owner known for outstanding client service, high tech marketing and a personal touch that is needed in a real estate transaction I have guided my sellers and buyers through the complicates process of a real estate transaction. I am proud to say my first full year in real estate I received the International Diamond Society designation, awarded to the top 11% of all Coldwell Banker Affiliated Sale Associates. 

I am grateful for my wonderful husband and 3 beautiful children. Also, to live on the South Shore of Massachusetts. I can truly say there is NO PLACE LIKE HOME!