Inheriting a property may seem like a significant event in your life and a positive one. However, when you start dealing with all the documents, going through the legal process, and trying to decide what to do next, life unexpectedly becomes pretty complicated. Don’t worry, though – we are here to help you deal with that.
In this article, you will learn seven steps you should take after inheriting the property, including paying the taxes, dealing with existing debts, getting new insurance, managing any other problematic issues (such as problems when two siblings inherit a house), and deciding whether to move in, rent, or sell the house, among others. Read on, and make sure you know what to do.
Consider the Local Property Laws
Property laws vary from state to state, and this is particularly true when we are talking about inherited property. There are no inheritance taxes in some states, while in others, you will have to pay between 3% and 20% of the property’s value. Also, if the property is a condominium, you should check whether there is anything in the association records that restricts or limits the use of the property. Such restrictions might include curfews, noise levels, or other rules that you should be aware of.
Pay the Taxes
The first thing that you need to do if you inherit property is to pay all the taxes. You may be surprised, but in most estates, the property taxes are due every year, regardless of whether the owner is alive or not. If you fail to pay the taxes on time, you will be held responsible for them, and the government might even put a tax lien against your property.
Get New Insurance
After receiving the house, you have to get new insurance for it. You will need this to make sure your financial interests are protected in case there is a fire or another type of damage. However, don’t just get any insurance – make sure you choose one that works for you.
For example, if you live in an area prone to hurricanes, you will need a policy that covers any damage caused by a hurricane instead of a standard policy. Also, if any special features in the house are essential to you (such as a swimming pool), make sure the policy covers them, too.
Consider Moving In
If the inherited property is located close enough for you to move into it without too much trouble, consider doing so. This can be a financially wise decision, even if you decide to sell the house later on. After all, it will be easier for you to get new insurance and estimates for repairs from contractors if you move in. Also, if you rent out your property, you can still deduct mortgage interest and property taxes from your income.
Sell or Rent out Your Inherited House
When deciding whether to rent out the house or sell it, here are some things you should take into consideration:
- If you choose to rent it out, have good credit and references from people who already rented from you before.
- Have a good credit history yourself – this will make it easier for people renting your house to get loans.
- Make sure your rental prices are reasonable and competitive (you can do this by researching local rental prices). Also, consider whether there is anything in your neighborhood that affects rents in general (for example, schools or transportation) and factor this information into your price calculations.
- Don’t forget that when you rent out a house, you will have to pay property taxes and take care of any repairs and maintenance needs.
- Keep in mind that while renting out your house is less risky than selling it, it may not earn as much money as selling it would have earned for you.
If you are not planning on moving into the house or renting it out and there are no other issues involved (such as inheritance taxes), you can decide to sell it. Selling the house is also an option if you plan on moving somewhere else permanently. If you choose to sell your inherited house rather than keep it, there are several things you should do when doing so:
- Find a reliable real estate agent who knows the market
- Do some research on the neighborhood where you live, and don’t be afraid to ask questions
- Be honest with your agent about what you want to achieve
- Don’t rush anything – remember that buying and selling houses takes time
Distribute Your Inheritance Between Heirs
The house you received from a relative is likely to be distributed between several heirs – siblings, for example. To do this reasonably, first, decide on how much of the property’s value will go to each heir and give them their share accordingly (in case some of your heirs don’t want their share right away – maybe they plan on using it as an investment).
Then, put aside enough money in a separate account for each heir so they can pay their taxes on their inheritance and pay off their debts. You can also help them pay these off if necessary. As soon as these steps are taken care of, each heir should have full control over his share of the inherited property.
Deal With Any Other Problematic Issues That Arise
There may be several other problematic issues arising after inheriting property from someone else, such as managing disputes between family members or dealing with a will or trust set up by someone else. It is best to consult with an attorney before dealing with any of these issues to be handled properly and legally.
Ask friends who had similar situations for recommendations on lawyers – they may have gone through a similar situation themselves and know someone who specializes in solving inheritance issues. If there are any other issues left over after inheriting property from someone else, deal with them as soon as possible – delays could cause more problems down the road.
Inheriting a property may seem like a major life event when you are the one who inherited it, but if you know what to do and how to deal with all the bureaucratic issues, it can be just another part of your life.
As far as dealing with the bureaucratic issues is concerned, you should consider contacting a lawyer in order to get legal advice and learn more about the laws where you live so that you don’t miss anything important. Also, it’s a good idea to contact your state or local officials for help with taxes, insurance, and any other problems you might have.