What To Do If You Inherit A House
If you inherit a home and already have one of your own, you are likely wondering if you should sell it or rent it out. There is no easy answer to this question. The route you take ultimately depends on your unique financial and life situation. Let’s take a look at what to do after inheriting a house.
Renting an Inherited Home
Renting an inherited home makes sense for most as it provides an extra source of income. The only downside is dealing with tenants and performing maintenance. Ask any landlord about the frustration and annoyance of ongoing repairs and troublesome tenants and you might think twice about renting an inherited home. However, some landlords have positive experiences with tenants and enjoy a steady stream of extra income across posterity.
Do not rent out your home until it is fully inspected. Safety issues must be addressed promptly. It also makes sense to take out a landlord insurance policy so you are not liable for damage to the property. Be sure to check all relevant city ordinances and homeowners association rules pertaining to renting. If you are thinking about turning the property into a vacation rental, beware this route has the potential to turn you into a full-time manager. It is better to simply rent the property to tenants who will likely stay for a year or longer.
If you are hesitant to rent your inherited home due to the work it takes to maintain the property, screen tenants and handle tenant complaints, consider hiring a management service. A professional property manager will handle all leasing, management and marketing responsibilities on your behalf. All you have to do is cash checks, pay the management group and enjoy life!
Selling an Inherited Home
If you are on the fence as to whether you want to be a landlord, you might be better off selling the home and cutting all ties with the property. Sell your inherited home and you will receive a bundle of cash in a lump sum rather than monthly rent payments from tenants. If you need a new car, are drowning in debt or plan on sending your son or daughter to college, it will be awfully tempting to sell your inherited home. The best part about selling is there is no need to pay capital gains tax on the home’s increase in value across the original owner’s lifetime. Only the hike in value between the point of inheritance and the moment you sell will be taxed.
Though selling a home is somewhat of an intimidating process, it will prove that much easier with the assistance of a real estate agent. Consult with such a professional regarding comparable sales prices for similar properties in the neighborhood. A real estate agent will also help market the home and maximize the selling price. This assistance will prove invaluable for those who do not live near the home’s location. Don’t forget to pick the real estate agent’s brain on whether it makes sense to sell the property as-is or spend for renovations. Though renovating is certainly costly, it makes the property that much more attractive as the average home-seeker does not want to move in and renovate.