A death in the family is never a pleasant experience for anyone and it can throw a number of unexpected issues in your direction. There are a lot of issues which will undoubtedly arise and which will need to be dealt with when this happens. Many of these are things that most people never think about before hand, but then the issue is thrust upon you when the unfortunate happens. One issue that can arise is having to make a decision after you inherit a property or land from relative who has passed away. There are a number of different decisions that you can make with it. You may decide to keep it, sell it or rent it to someone. Your decision will also depend on whether relevant financial statements like fiduciary bonds were issued before the relative passed away.
Effect of Tax
The value of share owned by the relative who passed away is a part of the property/land. When you inherit, you’ll be responsible for dealing with all the financial affairs. You would have to pay any debts/taxes before deciding what to do with the estate.
You have to pay tax on profit from the sale of the asset when you do a free efile, or pay tax on the rent depending on what you decide. If you decide to keep it, you still have to pay the tax.
Effect of an Owner/Tenant
If the property/land you inherit also has another owner, you’ll need to discuss the terms with them whether you want to rent it out, keep it or sell it. Their right to be co-owners may be mentioned in the will. If you property/land has a tenant, you’ll have to act as a responsible landlord. The rights of the people using the property/land will have to be taken into account if you’re planning to rent or sell.
1. If you’re planning to sell, keep or rent out, the first thing you should do is check the condition of the property/land. It might be that you inherited a mess that needs to be renovated. Renovation also increases the resale value. You also have the option to take advice from a real estate agent. Note down the costs for improvements as it will be important if taxes are applicable.
2. If you’re selling, make sure to pay the insurance until the property/land is sold. If stepped-up basis apply, you may not have to pay the tax. This is because the property is going to sell at the price that is equal to its original value. An accurate appraisal is also necessary as it helps determine the value of the home. This is going to help you, or any other parties to find out the estimate receiving amount by selling the house.
3. If you aren’t sure what to do, consider getting help from counselor. The counselor will determine whether the house has to be sold immediately or wait for the right price depending on the interests of involved beneficiaries. Consider getting opinions from 2-3 real estate agents when planning to rent out or sell the property/land. Ask them how and where they are going to market it. Do find out the current market price as well.
These tips will help you to make the right decision for the inherited property/land