You may have plenty of paperwork, tax issues, and legal matters to deal with before you get hold of your inherited property. And once it is yours, a myriad of emotions can grip you, rendering it impossible to decide what to do with it. Usually, there are three options that you can explore, including relocating, renting, and selling. All these have specific pros and cons. You can choose what suits you the most. But before that, let’s get into each of them one by one.
Living in the inherited house
If you don’t own a home already, you may consider moving into your inherited house. Or, the location or size of your owned house can be the reason why you decide to move from there. No matter whether it is this or any other issue, you can find this option attractive. But you need to know that it will involve taxes. You will have to make tax payments on the property. And in all probability, the amount can go up as some states reevaluate property values when ownership changes. According to some experts, you can avoid taxes for capital gains tax on inheritance if you spend a minimum of two years in the house.
Selling the inherited home
If it is a shared inheritance, you may decide to sell it to avoid any unwanted situation. At the same time, it can sound favorable if you don’t want to bear the cost of repairs, taxes, and others. When you choose this path, you may only have to pay the tax amount that increases between the period of inheritance and selling it. For instance, if the property’s value was $25,000 when your parents were there, and its present worth has increased to $325,000, you will not have to pay the tax on $300,000. The tax amount will include the difference between $325,000 and the selling price that you get. For understanding your tax burden, you can speak to a real estate attorney.
Nevertheless, you can think that you need to repair or upgrade your house to get the best value. While it can be relevant in some options, you can avoid this by choosing a real estate investment company for a deal. These companies pay cash for your property. They will assess the value of your property and make an offer.
Renting the inherited home
Some people opt for this to increase their revenue source. Renting a property can come in handy in the matter of tax returns. You can deduct the amount you spend on property maintenance and renovation. If you know the nitty-gritty of renting, you must not face any challenge in this area.
You can pick any of these options based on your needs and circumstances. As far as selling goes, you may need to wait for a probate process that can take up to several months. The laws can vary from state to state. Hence, it will be better to educate yourself on this to understand when you can sell your inherited house.