You Inherited a House, Now What?

Inheriting a house often comes with the emotions of dealing with the death of a loved one. However, it also means making some tough financial decisions: Do you keep it and move into it? Do you rent it out? Do you sell mom or dad’s house? What happens if it’s in desperate need of repairs? And even if the mortgage is paid off, there’s really no such thing as a “free” house.

“It can be a pain in the butt and you want to make sure it’s dealt with very efficiently, because if you’re not efficient with your decisions you have costs accruing on the home – property taxes, insurance, a mortgage, homeowners’ association fees. All of these things add up,” said Paul Tharp, a Minneapolis Realtor at Coldwell Banker Burnet.

“A free home is not necessarily as free as you’d think,” Tharp said.

What To Do If You Inherit a House

1. Hire a good tax attorney specializing in estate tax law to help with the complex paperwork. They can help you clear the property title and get the house transferred to your name.

2. Get an inspection, especially if the house hasn’t been updated in years.

3.Come to a consensus with everybody who has a stake in the house. The property may be left to multiple siblings (or other relatives) to split.

“It helps if everybody in the family is on the same page,” Tharp said. “If everybody has different interests, it’s going to get messy.”

This will all help you prepare for the next big decision: Move in, rent or sell it?

Move In

“You do have situations in which one of the children decides to live in the house,” said Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. “As a straight, normal transaction, you treat all of the siblings equal. The siblings that aren’t using the house would generally expect to be paid by the sibling taking over the house.”

If the house is not paid off — or you buy out your siblings’ shares — you will likely need to take out a mortgage (unless you have cash to pay it off).

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Rent

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Sell

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Tips for Selling