If You’ve Inherited a Home, It’s Time To Make Some Decisions.
If you inherit a home from a family member who has died, you may be facing several unexpected life and financial decisions. Should you keep the home, rent it out, live in it yourself or sell it? What about taxes? What if the home needs work?
Here are a few things to keep in mind as you navigate the home inheritance process:
Ownership Questions
Whether or not the deceased left a will, the question of who inherits real estate may not be completely clear. If the value of the person’s total estate exceeds $50,000, and if there are any questions about who should inherit any property, assets will likely be assessed and divided in a legal process called probate.
The process has been simplified in recent years, thanks to the Uniform Probate Code, but keep in mind that attorneys’ fees and other costs may be involved.
Tax Considerations
Once the estate is settled and it is clear you are the beneficiary who will receive the property, you may wonder about the tax burden that will fall to you. In general, the home’s fair market value will be assessed at the time of your family member’s death – rather than from the date that person purchased the home – which is called step-up in basis.
In simplified terms, that means you will likely avoid some or all capital gains taxes that might have been accrued over the time your family member owned the home. For example, if the deceased purchased the home for $50,000 in 1975, but the value of the home at the time of death is $350,000, you will not be responsible for capital gains on that $300,000 in increased value.
Other Financial Concerns
Is there still a mortgage or a reverse mortgage on the house? What are the property taxes? How much homeowners’ insurance will you need to maintain on the property? Will the property need significant repairs in order to live in it, rent it or sell it? These are some of the many financial questions that come into play when you inherit a home, and it is wise to seek the advice of professionals when deciding how to proceed.
Legal Advice
The information above is intended for educational purposes only and should not be used as official legal or financial advice. If you have inherited a home and need legal advice, consult with a licensed attorney.
Sell As Is Denver works directly with several licensed Colorado attorneys, and we may even be able to help you cover the cost of the attorney if you do work with us to sell your inherited home.
We will examine inheritance issues in more depth in future blogs. To learn more about how Sell As Is Denver can help you sell your inherited home, read more about our services for people who’ve inherited a home.