Have you inherited a house? Well, that’s a great thing. But what next? Deciding what to do with the property you inherited can be overwhelming, especially if you are a beginner. When it comes to selling or renting your property, there are several things you should consider, such as which choice would offer you more benefits in terms of physical maintenance, financial stability, and legal obligations.
Here is a comprehensive guide to walking you through the ins and outs of selling and renting your inherited house, helping you make an informed decision.
Selling A House: Things To Consider
If you decide to sell, there are a few factors you consider before you list it, such as
-
Other heirs
If you are the sole heir of your inherited property, you can decide whatever you want to do with it. But, if multiple heirs are involved, you have to discuss your opinion with them and agree on whether to sell or rent the house. It may even lead to tough conversations if the heirs have different ideas.
-
Emotional value
As a sole heir, you may get emotionally attached to your home. While considering selling, you will have to decide whether to let go of this precious inherited gift before you put it on the market.
-
Property condition
What condition is the property in? Does it require significant repairs? As an owner, you should review these practical things. Since repairs and remodels demand lots of investment, you can reconsider selling a property.
-
Existing mortgage
You don’t need to worry about settling on pending installments if you have inherited a property with no mortgage. But if not, the amount will be deducted from your proceeds when you sell the home. Also, you’ll have to pay the mortgage until the sale goes through to prevent foreclosure.
Pros of selling your inherited home
Some of the biggest advantages of selling a house include the following:
- You are not responsible for the home any longer
- You can earn money off the property sale
- You can use the profit from the sale for other purposes, like debts and tuition
Cons of selling inherited home
Despite some advantages of selling property, there are downsides you should know, such as
- The money you make off from the sale can be subject to a capital gain tax
- You have to pay fees associated with selling the home, repairs, and existing debts
- Once you sell the property, there is no ongoing source of income.
Renting A Property: Things To Consider
You should evaluate several considerations before renting the unit and generating income from it.
-
Dealing with tenants
As a landlord, you are responsible for answering your tenants’ calls, tracking them down for rent payments, and facing the trouble of evicting them. If you can tackle all these responsibilities, you can rent a property.
-
Maintaining the home
Even if you are not dwelling in the unit, you should maintain it regularly and consider regular upkeep. Fixing important repairs, like a burst pipe, leaking roof, and electrical problems can be expensive and will eat away at your rental profit.
-
Taxation
Lastly, you are responsible for paying the property taxes yearly. Depending on where the property is located, this can be a considerable amount of money deducted from your rent collection proceeds.
Pros for renting an inherited home:
Some primary reasons owners decide to rent their property include:
- You can earn an extra monthly income that can provide a financial boost
- You can keep the property you are emotionally attached to
- You can decide who will live in the unit
- A portion of rental income is tax-deductible
- You can rent a home and wait until the market improves and property value increases
Cons for renting an inherited home
Similar to the cons of selling an inherited house, you may experience a few financial roadblocks while renting out a property, such as
- You are responsible for repairs and regular maintenance
- You need to pay taxes annually apart from deductions
- You have to purchase an insurance policy
- You may face tenant-related issues like delayed rent payments or evictions
- You also have to be available 24/7 to your renters
All the above factors can help you avoid a quandary over whether you sell or rent an inherited home. However, if you still need clarification and expert advice, consider discussing it with professional property managers at New Bridge Management. We have been in the real estate market for over 14 years and can give you the best suggestions that help you gain maximum profit out of your investment.
For more information, contact us at New Bridge Management.
