If you’re lucky enough, you might one day end up being the sole heir to a house from a deceased family member, friend, or relative. Although inheriting a house is relatively common, especially between parents and their offspring, not everyone knows what to do or even what their options are when they do end up inheriting a house. So, once you’ve already finished all the necessary paperwork and legal processes needed to put the house under your name as the sole heir, what’s next? Today, we’ll be taking a look at your options on what to do with the house you just inherited.
Move In (or Stay In)
If you already have a place of your own (either by renting or owning a house or unit), you do have the option to move into the house you just inherited. Likewise, it’s also possible that you’re already staying in the house, so staying in would be a logical option. However, if you’re moving into your inherited home, it’s best to have a contractor inspect it first prior to making the move to ensure that the house is structurally sound and the plumbing and electrical are all in working condition — the last thing you’d want to do is moving into a house that’s on the verge of collapse or doesn’t have running water.
If you’re not keen on moving in or you need money to purchase or build your own house in a place that you want, your next option would to simply sell the house you inherited. Selling a house is pretty straightforward, but you’d still want to consider checking out the market and if it’s the right time to sell, or perhaps have a real estate agent sell it for you to ensure that you get the most out of the sale. You might want to refurbish and renovate the house to increase its value and make it easier to sell or find a real estate company that buys houses in any condition if you’re in a rush to sell it.
Rent It Out
For those who wish to keep the house but don’t want to move in, you can consider having the place rented out. This way, the house stays and you can earn passive income. Just make sure that you carefully select your tenants (to avoid late payments and damage to the house), and also have a contractor inspect the place and perform the necessary repairs and renovations.
If you want to have an extra house, but you feel like the house you inherited just isn’t the one for you (or if you’ve already set your eyes on a particular house in some other neighborhood), you can take advantage of a 1031 exchange, which allows you to sell a property (as long as it’s not your main residence) and purchase a like-kind property; hence the term “exchange”. A 1031 exchange allows you to save a lot of money by deferring the payment of capital gains taxes on the house or property you sold. If you’re partial towards the idea of exchanging your inherited house, you should get a 1031 qualified intermediary and advisor to help you out.
The last option is simply to just maintain it. This option is for those who haven’t decided on what to do with the house, those who wish to keep the house in memory of the person they inherited it from, people who aren’t open to the idea of having it rented out, or those who simply want to have a spare house just in case they need a place to stay. If you’re keeping the house, make sure to have it maintained to ensure that it doesn’t deteriorate and can easily be available for renting, selling, exchanging, or moving into when needed.
Knowing what to do with an inherited house prevents any delays and allows you to make an informed decision. So, if you’ve inherited a house, try to weigh in each available option and see which one best suits your needs and preferences.