Congratulations! You’ve got yourself a house without having to buy it, think about all the pre-purchase paperwork and even the construction itself however, inheriting property may or may not be the dream that it sounds to be.
Nevertheless, once you know and learn how to navigate the processes that come with inheriting a property, nothing can beat the definite upgrade in convenience AND your credit score that it brings.
First of all, how does one inherit a piece of property? Inherited property is usually gotten through two ways.
- Inherited from a family member whether living or dead – this can be a marriage gift, graduation gift, a no-occasion gift from living relatives, or an inheritance left to you in a deceased’s family member’s will.
- Being given a piece of property if you have joint ownership of a property with someone who dies unexpectedly.
However ay you got it, inheriting property comes with a lot of responsibilities, and here’s how you can prepare for all of them:
If the property you’ve acquired still has an ongoing mortgage, the mortgage will be transferred to you and it will now be your job to make sure all the payments are kept and are on time. Note that even if you decide that you won’t use it or won’t live in it, mortgage payments remain to be needed to settle so it should be added to your monthly budgeting. You just have to contact the bank, lender, or institution which issues the mortgage on your property, explain that there has been a change in ownership through inheritance and the mortgage can be processed to get transferred to you.
Other than a mortgage, depending on how the house was purchased, there may be outstanding loans, debts, and the like. With this, before moving forward with any plans you have for the property whether it be thinking of selling, renting it out, or even occupying it for you to live in, it is best to check with the local government about where the property is located and other government agencies related to real estate in the area to see if you are inheriting any financial debts along with the house that you need to take care of.
One of the more beneficial obligations that you will have to shoulder as well as the insurance of your acquired property. If it is under insurance and is still active, you will have to take over the monthly payments. One thing nice about house insurance is the flexibility that it has, unlike the mortgage.
Depending on your decision, you can let the property’s current insurance company know that you are now the new owner and you will be given a certain period of time to either decide on stopping the insurance of the house, keeping the current insurance plan and having the name and account transferred to you or, if you prefer, look for a new insurance company to continue your insurance elsewhere.
Last but not the least, depending on your decision on what to do with the property you have inherited, there may be taxes involved. Depending on the state and area the property is located, selling it and/or renting it may require you to pay different kinds of taxes such as Capital gains taxes before you are able to push through with the selling and the renting. If you do decide to live in it, you may also be required to start paying property taxes on it.
With taxes, you don’t want to be caught in a bind in the middle of whatever option you’ve chosen to do with the property so it is best to consult a professional regarding anything you want to do and what you are obligated to have in order first before you push through.
Inheriting a property when it comes to the obligations, paperwork, and processes requires pretty much the same legal work and considerations as having bought one yourself. With this, the best way to move forward when you inherit a piece of property is to IMMEDIATELY hire a real estate agent, an accountant, or a tax professional to go over what it means to be able to inherit the property, ask for the pros and cons of every possibility regarding what you’ll do with it, have them look into outstanding payments needed to be made and generally have them help you tie up all the loose ends. Once you’re done with all the paperwork and legalities, you’ll be able to enjoy your brand-new inherited property!