INHERITED REAL ESTATE?
Should you sell, rent or keep for yourself?

If you are like most people who suddenly learn that they have inherited real estate, your first question is “what are my options?”.

Should you sell, rent or just move in yourself?  Without a professional who can accurately assess your options, it’s really just best guess.

That’s why, at no charge, we will provide you with a free market assessment and provide you will detailed, itemized information to allow you to make your best informed decision.

Evaluate your options:

Option 1; Sell the property:

  • If you are looking to sell the property, we will determine every facet necessary to prepare the property for market.
  • If repairs are needed we will gather bids so you will know the exact expense.
  • If you are struggling with sentimental belongings, we will inventory everything so no questions or conflicts arise in the future. And, if an estate sale needs to be held, we can coordinate that as well.
  • If the property needs to be cleaned or staged, we will gather those bids as well.

Option 2; Renting the property

If you want to consider renting the property, we will calculate the expenses and gather bids necessary to prepare the property. Once again, if this is the option you select, we will gather bids and if approved, we will manage the job through completion. And, once again, we will even select the realtor to rent the property.

Option 3; Keeping the house as a residence

If you want to consider living in the home yourself, we will once again provide you with a complete assessment of the property, any needed repairs and if instructed, we will oversee every detail through completion.

Finally, if you want us to oversee all necessary work, we will oversee every facet. We can even help you find a realtor to market the property. We take the uncertainty out of the equation allowing you to make the decision that best suits your situation.

Six considerations when inheriting real estate:

Estate Tax

Federal estate tax applies when an estate’s value, including real estate, exceeds a certain threshold. The estate tax comes out of the estate before you take ownership of inherited property. That means your property would only be affected if the estate lacks sufficient liquid assets to pay estate taxes. If the estate is short on cash, the properties may need to be liquidated. Depending on where you live and the property’s location, you may also be required to pay state inheritance tax which comes out of your own pocket — for the portion of the estate you inherited.

Florida does not have a separate state inheritance tax. In addition, heirs and beneficiaries in Florida do not pay income tax on any monies received from an estate because inherited property does not count as income for federal income tax purposes.

Appraisals

Real estate inheritance usually requires a valuation.  This is beneficial so that the basis of the asset is “stepped up” to its fair market value at the time of the owner’s death or alternate valuation date. This will adjust the value to include any improvements made to the property prior to the decedent’s death. If you sell the property, the sale generates taxes only for gains following the step up in basis valuation, not from the initial date of purchase, which might have been decades prior.

Maintenance

If you decide to keep the property and rent it, maintenance and overhead can take a big bite out of profits. Landlords are required to hold insurance policies, which can cost as much as 25 percent more than a homeowners policy for the same property.

Utilities

Homebuyers often ask previous owners for a year’s worth of utility bills for budgeting purposes, and it’s wise to do the same when you’re inheriting real estate. This may create opportunities for capital improvements, such as installing new windows. These updates may lower your utility bills and qualify for tax credits.

Property Taxes

Property taxes vary by locality, and can make a big difference in what you’ll pay.

Capital Gains

The step up in basis will reduce most capital gains to zero. However, if the taxpayer rents the property for a time, the value may increase, in which case, selling the inherited property may subject you to capital gains taxation. Knowing the rules and regulations ahead of time will help you understand the costs involved and how to minimize them.

Let us remove the uncertainty so that you to make the best decision.

FREQUENTLY ASKED QUESTIONS

Do I have to pay taxes on an inherited home?

If you inherit property, you may wonder if you’re responsible for paying taxes. Luckily, there’s no federal inheritance tax, although some states do have inheritance taxes. But for most people, inheriting property doesn’t trigger an immediate tax liability.

When a property is inherited, the IRS establishes a fain market value (FMV), which is the new basis for the property. This is called a step-up basis. This new valuation influences future taxes when the property sells.

Capital gains are a special type of tax relating to the profit generated by an asset, such as a house. The step up in basis means you’re only subject to capital gains taxes if you sell the home. You’ll pay taxes on the difference between the established fair market value at the time of inheritance and the selling price.

What are my financial responsibilities of inheriting a house?

Inheriting a home can be a blessing or a burden, depending on several factors:

  • The existing debt obligations, such as a mortgage
  • The current condition of the property
  • The costs of ongoing maintenance and upkeep
  • If there are multiple heirs
  • Does the inherited property have an open mortgage?
    If the property has an open mortgage, it’s important to discern the type of mortgage and whether it’s due on sale or assumable. Most mortgages can be assumed by the mortgagor’s heirs, meaning the heirs take over payments and pay the remaining debt according to the original loan terms.However, some loans, like reverse mortgages, specifically state that the unpaid balance is due on sale or when the mortgagor passes, requiring the heirs to sell the home to settle the debt.
  • What is the condition of the property?
    The condition of an inherited property often impacts what the heirs decide to do with it. If the property hasn’t been maintained, it could need costly and time-consuming improvements. Coordinating a small- or large-scale renovation is a big task and should be carefully considered before deciding whether to keep the home or sell it. Florida Real Estate options will provide you with all of your alternatives.Additionally, the heirs are now responsible for paying taxes, insuring the property, and maintaining it on an ongoing basis. For some, these responsibilities are too large of a burden — in this case, it may be easier to sell the home as-is. For others, it may make sense to fix up the home and keep it.

Call Us Today To Schedule A Free Consultation

Includes a free market analysis should you wish to sell.

Plus a FREE property evaluation identifying the steps and potential expenses required to prepare your property to sell, rent or keep.