Boomers stand to inherit upwards of $27 trillion over the next forty years, according to The Center of Wealth and Philanthropy at Boston College, and a portion of that includes the house their parents lived in.
But when you inherit a house from your folks, figuring out what to do with it can present financial and emotional issues.
If your siblings are involved, things can get even trickier. There are three basic paths you can take. Sell the house fast, move into it or rent it out.
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Here’s advice for each scenario:
Selling Your Inherited House
A few years back, when Bill Anderson, 52, and his brother inherited their mom’s house in Los Angeles CA, they pretty much knew they’d sell it.
Since the house had appreciated in value during the nearly 10 years their mom owned it, the brothers looked at recent comparable sales to price it right and to agree on a minimum amount they’d accept.
In spite of the appreciation, they knew they’d most likely avoid owing capital gains taxes on the sale. “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.”
Currently, long-term capital gains run upwards of 20%, depending on your tax bracket.
Taking a gander at comps and settling on a base cost, as the Levys did, are smart thoughts on the off chance that you plan to offer your parent’s home.
You’ll also need to ensure the mortgage holder’s protection is paid up and the home or trust is named as the safeguarded, on the off chance that anything happens to the home between your parent’s demise and the deal. The same is valid for home loan installments (assuming any), property charges and service bills.
Once the property offers, you’ll have to pay any residual home loan adjust alongside any land commissions, exchange charges and other shutting costs.
Selling Your Parent’s Inherited House
It was nothing unexpected when Linda Ferrando, 54, and her better half moved into the family home in Burlingame, Calif. after she and her two sisters acquired it. “My sisters and I had discussed it with my mother before she passed,” says Ferrando. “We as a whole concurred it seemed well and good. It was practically around the bend from me and much bigger than my present house — and my sisters lived somewhere else.”
If you need help selling an inherited house, then please contact us