INHERITING A HOUSE
A property can occasionally be more of a burden to inherit than it is worth. Receiving a house for free does not imply that all costs are covered, and it frequently means that difficult decisions must be made at a trying emotional period.
You’ll have to deal with serious financial difficulties in addition to having to clean out the house and remove your loved one’s personal effects. Can you sell it? Do you enter it? Give it away?
Unfortunately, you might not have much time to think things through because inheriting a property comes with additional costs that could affect your choice.
Maintaining Your House Inheritance
After inheriting a home, you’ll need to assess important factors right once if you don’t want it to soon fall into disrepair, such as utilities, cleaning, and gardening. Utilities like gas, electricity, and water will need to be maintained on inherited houses, especially in Massachusetts. This will prevent pipes from freezing and bursturing during the severe winters of New England. You might need to pay a business to “winterize” the property if you’d prefer not to do this.
To prevent bugs and vermin from taking over the inside of the property, you might also need to employ a landscaping firm to maintain the home’s outside and set up routine housekeeping.
Property and Inheritance Tax
Another crucial factor to take into account when inheriting a home are property taxes. You will be entirely responsible for paying any outstanding real estate taxes. Selling may be the greatest option to prevent ongoing costs on this undesirable property when combined with the utilities and/or upkeep costs of your “free” house.
Another major issue to consider is inheritance tax. Your property will be valued according to its fair market worth at the time of your inheritance. You’ll have to pay capital gains on the sale if you keep it for a while. For instance, if your property’s tax base value in 2016 was $220,000 and you sell it in 2019 for $250,000, you’ll have to pay capital gains on the $30,000 difference.
Fortunately, getting a house via inheritance isn’t always a hassle. It may be possible to avoid years of unforeseen costs, hassles, and long-term tax liabilities by selling the house for cash immediately at or slightly below the tax basis allocated on the day you inherited it.