What Do I Do When I Inherit My Parents Home in Onondaga County?
Are you in a position where you will or have just inherited your parents home?
There are several emotions surrounding the inheritance of home from your parents. At this point in time you are dealing with the passing of your parents, mourning with your family and figuring out how to handle the remains of your parent's assets.
Initially you may think that inheriting a home from a deceased love may become a benefit to you and your family. After all you will be given a deed to a property without having to purchase it. Certainly, inheriting a home can be a great way to carry on the family legacy and everything that your deceased loved one meant to the family.
However, what if you inherited a home from a loved one who still has a mortgage on the property? or if the property you are inheriting has a bunch of repairs that are needed to put it in shape to sell?
With the inheritance of the property, come's the loan, repairs and all other issues concerning the inherited property.
So my next question to you is, what do you do with the home if you realize you simply do not want it or you can't afford to pay the mortgage and make the repairs?
This is where figuring out what to do with this property can cause both financial and emotional stress.
There are 3 basic ways to resolve this issue. You can either sell the house, rent the house or simply move in it. The scenario that you choose will depend on your financial situation, experience and current housing situation.
In a perfect situation, the "will" that was created will state how the mortgage is to be paid off. This will simply tell the executor of the estate how to handle the mortgage debt. Once this mortgage is paid off, the property is your's free and clear. This situation, is however a rarity and in Onondaga County we also have to deal with high property taxes. So even though the mortgage may be paid off, we also have to account for the taxes that are due every year. If you are unable to pay the mortgage or taxes you will face foreclosure, which can be devastating to your credit.
Selling Your Inherited Property in Onondaga County
When it comes to the sale of your parents inherited property, there are several variables you have to consider. The first being the tax implications of selling an inherited property. “Beneficiaries receive a stepped-up basis, which is the property’s fair market value at the date of the parent’s death,” “When you sell, you only pay taxes on gains over that basis.”
Depending on the properties current condition and your motivation to get it sold will determine which sales solution you move forward with. You will have two options when it comes to selling your parents inherited property.
A) Selling Traditionally
Your first option will be to hire a real estate agent to list your property and work the sale. This is the common solution for many people looking to sell their property for retail value. If the home that you inherited is in great condition, this will be your best bet. Your real estate agent will run a comparable market analysis for you to determine what similiar homes in your area are selling for. They will then list your house on the market, hold open houses, network with their community and try and get your property sold for full market value.
Some concerns with selling the traditional route are:
The length of the process (you will be selling to a buyer obtaining bank financing)
Paying holding costs throughout the selling process (mortgage, taxes, utilities, insurance)
Deal falling through due to financing
Not receiving the appraisal needed to sell for that amount
Maintaining the property in sale ready condition
These are just a few of the concerns that we want you to think about when considering selling your inherited home the traditional route.
B) Selling To A Real Estate Investment Firm
Your second option will be to sell your inherited property to a real estate investment firm. This solution is very unique due to the terms that they offer. If the home that you inherited has several repairs that are needed, is in poor condition or you really just want to get rid of the property due to being unable to pay the mortgage, taxes or maintaining the property, this may be the best solution for you.
Some of the benefits of selling to a real estate investment firm are:
You will pay no closing costs
You will pay no commissions
You will not have to hire a real estate agent
There will be no walk throughs or open houses (they are your only buyer)
They purchase homes in cash (no chance of deal falling through)
Since they purchase in cash, you will be able to close within 20 days (check in your hand in 20 days)
You will not have to maintain the property or make any repairs
You will not have to pay any holding costs, due to the fast closing
These terms are very beneficial to homeowners looking to sell their house fast and sell the house for a discount.
Moving Into Your Parents Inherited Home
Some family members decide that the best solution to this situation is to move into their parents property. This is typically planned prior to the passing of their loved one and is seen as benefit to the family member moving in. This will allow you to continue the family legacy, memories and will give you time to sort through all of your parents belongings. This is a luxury not given to those who decide to sell the house immediately.
As this may seem like an easy decision for some, there are still some concerns that we want to run by you before moving forward with this solution.
Moving in, may result in an increase in property taxes. The house will be worth more due to the stepped up basis and also any special property tax break that your parents may have had will be relinquished once you take over the deed of the property.
With these concerns, there is a big positive. If you decide to make this your primary residence and you will live in the property for more than 2 years, you will be able to sell the property tax free up to $250,000 (single) and $500,000 (married). This means that you will not have to pay any capital gains tax on the sale of the property.
Renting Your Parents Inherited Property
Some families are not to keen on selling the property and moving into the property just doesn't make sense. For these folks there is another solution and that is renting the home out. You can either decide to rent this property on a short term - vacation rental plan or you can decide to rent the property long term. If you do decide to move forward with this solution, we highly recommend that you read and educate yourself on the topic before diving in. Being a landlord is not for everyone and just because you will be taking in rental income does not mean that it will become an asset for the family. There are several factors that you need to consider if you decide to rent your deceased parents home.
Understand the numbers (Rental income, cash flow, cash on cash return, operating expense, etc.)
Know how to screen tenants
Understand property management
Know what repairs are needed to maximize rent
Have a system in place to collect rent
Understand your rental agreement
There are several educational resources on this topic across the internet, through books, blogs and podcasts. If you do decide to move forward with this solution, we recommend that you take the time to learn if landlording is right for you.
Wrapping Up | What Do I Do When I Inherit My Parents Home in Onondaga County
As you can see there a couple different scenarios for you to consider when you are put in the position where you inherit your parents home. Each option offers different benefits. The option you choose will be determined by your emotional state, financial situation, experience and current housing situation. We want you to consider all of the variables before you decide to move forward with a specific situation.
After you do your research and you decide that you want to sell your parents inherited home in Onondaga County to a real estate investment firm, give us a call at (315) 516-8023 or click the link below to learn more about the process.
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