Sweet Granny has gone to the great beyond, and you just found out she left you her 1930s rancher that is dilapidated and packed to the rafters with memorabilia. You already have your own home and certainly don’t need a second one to manage. What do you do next?
Photo by Tracy Thomas
Love It or List It
The first order of business is deciding if Granny’s memory is worth keeping the house. You might even make a pros and cons list that takes into account things like:
- the home’s state of repair or disrepair
- its location and estimated value
- the cost of sprucing it up for resale vs the cost of fixing it to be lived in
- how it might come out as a rental property (and if you want to be a landlord)
- where the mortgage stands (whether she was current on her bills, or was underwater)
- what taxes you’ll face compared to the revenue of selling or renting (and there are always taxes on an inherited property)
Just don’t forget that while you’re researching and planning, you’re still responsible for any ongoing costs associated with the house: utilities, trash and sewer, water, HOA fees, etc. Be sure to not let any of these bills slip while you’re deciding what to do.
There can be some benefit to selling pretty quickly after inheriting. According to the stepped-up basis tax structure, you don’t pay any tax on the house prior to the date of death, and the house is valued at the current market rate. So if the market’s favorable, you could stand to make a nice profit on it.
Another barrier to listing it could be siblings. If you co-inherited the house with other grandchildren or family members, the inheritors have to all agree on what to do with the house. Unfortunately, if you can’t agree, the only real option is to hire a lawyer and go to court.
If the inheritance is unexpected or there are multiple inheritors or disputes around what to do with the house, the best advice is to hire a lawyer. Not only can a lawyer help legally resolve confusion among inheritors and guarantee the best outcome with fewer hiccups, but they can help you discover options you may not know exist. For instance, did you know that if no one really wants to deal with the house at all, there is legal recourse for not accepting the inheritance?
Even if you’re comfortable with the ins and outs of owning a second house, it would be a smart idea to at least pay for a consultation with a tax attorney. They can review the will and inheritance documents and advise you on the best way to proceed in selling or making the house your own. They can help you understand what rights you have in contacting the lender and negotiating new terms or refinancing. A little upfront cost and advice might save you a huge headache down the road.Photo by Clark Young
Don’t forget that even in this process, there can be a lot of emotion and memories to deal with. Before you start making big decisions, take the time to make sure you’ve grieved and you’ve talked to any remaining family members who may need to see the house or collect a token of remembrance before you act. Sometimes, the weight of emotion clouds our real feelings towards a person, place, or thing. Take the time to make decisions you know you won’t regret a few years down the road.