What To Do With An Inherited Property
Most individuals who inherit a property are not prepared for what comes next. Due to the emotional distress of losing a loved one, the logistics associated with managing a newly inherited property are often overwhelming and are the last thing anyone wants to deal with. We’re here to make that process a little easier by outlining the basics of what you can do with an inherited property and the details associated with each option.
Before deciding what to do, you must first identify who has the right to make the final decision. If there are joint inheritors, for example, you all must agree on your course of action – if there are challenges in that process, the dispute will need to be placed into legal hands. However, if you are the sole inheritor, there is no need to worry about sharing the decision.
To get started, it is important that you first understand the laws associated with inheriting a property in the state of Texas. This information can help you make a final decision on what to do with the property:
● There is no state inheritance or estate tax for Texas properties. There may be federal estate tax due only if the property value exceeds $11.18 million.
● A child under the age of 18 cannot legally inherit a property. They may, however, be named beneficiary to a trust, and the trustee can manage the future of the property.
● Following someone’s death, their assets typically enter into probate – probate is the official way that an estate gets settled under the supervision of the court and is implemented to prevent fraud. However, the state of Texas treats small estate rulings differently by removing the necessity for formal court hearings to determine the actions for the estate. If an estate is valued below the “small estates” limit ($50,000 or less), then the inheritors can settle the future of the estate with an affidavit.
Once you have reviewed the basic laws, it is time to look at your options and determine your next step:
Keep the Property
You can keep the property to live in yourself or rent it out as an investment property. If you live in it yourself, there are a few things you will need to consider before packing your belongings.
Does the property have any debts, or are there any taxes due on it? If there is a mortgage on the property, or if there are taxes due (either back taxes or annual taxes), you will now be responsible for the payments. Before keeping the asset, consider whether or not you can afford these additional expenses! The last thing you want is to overlook this detail and have the home repossessed.
What is the condition of the property? Was the interior and foundation kept up? If the answer is no, then ask yourself: do you have the finances and time to repair the house? Rehabbing a property can be costly and time consuming – is this something you want to do? In order to gain a full understanding of the financial burden this could have on you, have the home inspected and assessed by a professional.
As an investment property, ask yourself the same questions. Then ask yourself – are you in the market to manage a real estate asset? Although this can be a great source of income, it can also require much time. Additionally, if you decide to utilize the asset as an investment property, remember you will now also be responsible for paying income tax on the profit you earn from the renters.
Sell the Property
If you decide not to keep the property, whether it is due to familial or financial issues, then you can sell the unit. You can either utilize a real estate broker or find an off-the-market buyer.
If you are looking to list the property, you would take similar steps as if you were listing any other asset. First, you would hire a real estate agent to list the property on the market. Then, the agent would be responsible for marketing and negotiating with potential buyers, fighting for the best deal on the property. Once a buyer was identified, the property would go into escrow and close according to the contingencies negotiated.
Keep in mind that selling with a real estate agent can be time consuming, especially considering the added burden of having suffered a loss. Most individuals who inherit a property are taking on an unexpected responsibility and do not want to go through the hassle of hiring, marketing, and negotiating a deal on the home. Therefore, selling to an off-the-market investor can be the best option.
Choosing to sell to an established investor can often be the lowest-hassle opportunity for individuals experiencing emotional tumult. All-cash investors can provide the capital for families to pay off back taxes or past due mortgages, or they can create an easy resolution to joint inheritors who are locked in a dispute on what to do with the property. Settling for an all-cash offer also provides some closure and allows individuals to shut the door on a painful chapter of their lives.
The Next Step
No matter what you are debating on doing, it is always recommended to seek a professional opinion. Emotions run high in a time of loss, and individuals’ thinking may be unclear. We here at Gulf State Homebuyers specialize in working with inherited property and would be happy to provide you with a free consultation. Our goal is to help you identify what the best options are for you and your family as you begin to heal.