Inheriting a house almost always starts with bad news: someone you love has died. Most of the time this happens, it means your parents have passed away, so you’re sad and maybe in a state of shock. And now you have a house to deal with. This also means you’ll have to deal with the contents of the house: memories, mementos, and probably a lot of stuff you don’t know what to do with. But, once you get through all that, you still have a house that now belongs to you. More often than not, it is in some state of disrepair or in need of a remodel. And, you may already have a house. It is a lot to have dumped in your lap! Still, the first thing you will do is make sure you consult an attorney to make sure all the legal paperwork is managed correctly. Legal issues can be a headache down the road.
Once upon a time, children inherited their childhood homes. The property had been paid for long ago. Now, parents are taking out home equity lines, getting second mortgages, or getting reverse mortgages. That means while the home is yours, money is still owed on the house. The loan doesn’t transfer to you, so you’ll have to get a loan yourself to pay for the home. That can be a big hassle.
So back to home repairs. If you have some outdated paint and decorations, you can do that yourself and have a modern looking home. No big deal. However, if on top of that, the appliances, light fixtures, faucets, and flooring are outdated, you now have a remodel that will cost tens of thousands of dollars. If you have serious repairs, like the roof, plumbing, or foundation, you could easily get to $50,000 to $75,000! You have to ask yourself, is it worth it at this point?
What you plan to do with the house will have a major impact on your decision. Do you want to sell it? Are you going to rent it out or live in it? If you sell it, the good news is you only pay taxes on the difference between your sale price and the market value of the house when the former property owner died. If you are going to rent it or live in it, you should look into the property tax situation where you live. Often, elderly home owners get a tax break on their property. When it passes to you, your tax bill will be higher, potentially much higher! So, along with the new mortgage payment, you will have higher taxes to pay too. If you rent it out, be sure to factor in these costs.
If you keep the house to live in it or rent it out, you’ll have to update and repair the home. You’ll most likely have a mortgage to pay, and you will have higher taxes to pay. As long as those costs are manageable for you, you can end up with a positive situation: a nice place to live or residual income.
If all that seems like too much, then selling might be your best option. If the home is in excellent shape, contact a realtor to list the house. In the case where the property requires a lot of updates and repairs, consider a cash buyer to take it off your hands quickly.