Should You Sell a House You’ve Inherited?

Should You Sell a House You’ve Inherited?

So, you’ve inherited a house and you’re wondering if you should keep it or sell it? Well, there are pros and cons to both options, and this article will help you decide which move is right for you.

4 Reasons to keep a home you’ve inherited

Here are four good reasons to keep the home you’ve inherited.

1. You can rent it out to generate income

Owning real estate can be lucrative and if you’ve inherited a house that can be rented out for profit, it makes sense to keep that home. A completely paid-for property is the ideal home to rent because you won’t have a mortgage.

In this case, the rent you collect will first cover normal expenses like repairs, property taxes, and insurance policies. After your expenses are paid, it’s pure profit.

Most real estate investors spend decades waiting for their properties to be paid off in order to have a significant flow of income. When you inherit a house, you get to jump ahead in the game.

2. You need a place to live

Needing a place to live is the most obvious reason to keep an inherited house. If you’re currently renting, but would like a bigger space, or if you’ve overstayed your welcome somewhere and need a place of your own, you should keep your inherited property.

On the other hand, if the home you inherited is nicer than the home you currently live in, you may want to consider selling your existing home to move into your new property.

3. The home has sentimental value

One of the reasons people have a hard time selling an inherited home is when that property has sentimental value. If you grew up in the home or it belonged to your grandparents and you have fond memories, you may not want to part with the property right away. Although, at some point, you’ll probably end up selling the home when the responsibilities become too much.

4. Your grown children need a home

If you have kids who need a place of their own, nothing beats being able to give them a place to live. You don’t have to let them live in the house for free – you can charge them rent. However, it will make their search for a home easier. They won’t have to bother with rental applications and can get into their home right away.

3 Reasons to sell a home you’ve inherited

Here are four good reasons to sell the home you’ve inherited.

1. You can’t afford the upkeep

Maintaining a residential property can be both exhausting and expensive. Whether you rent it out or not, you’ll be performing repairs and maintenance regularly. Dishwashers and refrigerators break down, fences need mending, roofs need patching, and plumbing needs regular care.

There will always be repair tasks to perform and when you’re not as prepared as a real estate investor, you might not know how to manage these things. Real estate investors buy property with an existing financial plan to manage their properties over time. When you inherit a property, you don’t have that advantage and all the financial responsibilities tend to be unexpected and overwhelming.

If you find that you can’t afford the upkeep on your inherited property, that’s a good enough reason to sell. It’s not worth going into debt to keep.

2. You can’t afford the taxes

Owning a home means paying property taxes every year. Depending on the property you’ve inherited, you could owe anywhere from a few thousand dollars each year to tens of thousands of dollars.

If you’re not able to pay the extra property taxes, it makes sense to sell the home you’ve inherited. Maybe you already have your own property taxes to take care of and you don’t really want to rent the property out.

Even though you could rent it out and recover the cost of the property taxes, it’s exhausting and grueling to be a landlord. In this case, selling the property makes the most sense.

3. You don’t need or want the property

If you don’t have any need for the property you’ve inherited, or if you don’t want to keep it for any reason, then selling is the most logical choice to make. It’s too expensive to hang on to a property you don’t have plans to either rent or live in, so selling it will be the best way to save yourself from paying unnecessary fees and taxes.

Yes, you’ll pay taxes on the sale of the property, but since it was inherited, it’s worth paying because you’re not losing money on the deal. After taxes, any gain you receive from the sale will be pure profit to you.

Things to keep in mind when selling inherited property

When selling inherited property, remember that you will be required to pay capital gains taxes on the difference between the inherited value and the final sale price. In other words, you won’t pay taxes on the entire increase in value since the home was purchased. The IRS uses the “stepped-up” formula to calculate capital gains owed on inherited property.

However, if you’re going to sell, you’ll save money by waiting at least a year to sell the home. When you sell within the first year, you’ll be subject to short-term capital gains taxes in the range of 10-37%. If you wait more than a year to sell your inherited property, you’ll pay long-term capital gains rates between 0-20%.

Also note that if you’ve ever rented your inherited property, you’ll need to pay income taxes.

Want to sell your inherited property? We’ll give you a cash offer

If you’ve decided to sell the home you’ve inherited, contact us and we’ll give you a cash offer in 24 hours or less. We make selling your home easy. We’ll buy your property as-is, so you don’t have to worry about making expensive repairs just to get it sold. You won’t have to bother with listing, showings, and we’ll pay all the closing costs.

Contact us today to get a cash offer and we’ll be in touch within 24 hours!

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