I’ve inherited a house in Hawaii . . Now what?
It’s a question many face when they suddenly inherit a house without any prior knowledge on the situation. In this article, I will inform you of everything you need to consider if you’ve inherited a house.
Inheriting a house can be a fortune for some and a headache for others. There are several things you can do when you’ve inherited a house – move in, sell it, or rent it.
But there are also many other implications you might have to consider, such as inheriting a house with a mortgage, paying taxes on an inherited house and tax implications.
But don’t worry. Everything you need to know about inheriting a house is explained below, including what happens if you inherit a property with a mortgage, and any tax implications you might face.
First off, you need to decide whether you want to sell, rent it, or move in when you’ve inherited a house. If you don’t wish to do anything with the property, you can also disclaim it – scroll to the bottom to find out how to disclaim your inherited property.
SECOND STEP: READ THE WILL!
Does the deceased have a valid will? Are you fully aware of everything the deceased is offering? If you’re not sure how to proceed, it’s always best to consult with a professional.
What you should know: If the estate is worth more than $100,000, the court will start a probate to make sure all debts are paid and everything is properly distributed. Having a will does not avoid the probate process. If the will is not valid, the court will follow laws of intestacy.
I INHERITED A HOUSE AND DECIDED TO SELL IT. WHAT DO I HAVE TO DO?
When deciding to sell your inherited house, here are the first steps you need to take:
- Verify your ownership.
- Get advice from a professional Realtor.
- See a tax advisor.
- Evaluate condition of the house.
Does the house need an upgrade to up the value? Are there improvements you need to make? Does the exterminator need to be called? Make an inventory of all items and records maintenance and/or structural problems. Next, get at least two bids from appropriate service providers. Thumbtack is an excellent site to find contractors and get bids.
Once you have any necessary bids, talk to a trusted Realtor whether you’re likely be better off financially selling the house in its current condition or spending the time and money to make certain repairs. Please note, in most cases a qualified real estate agent can quickly give you his/her best recommendation of value of the home. However, a recommendation could take longer if the home is in substandard condition.
In addition, do you wish to sell your house fast to a cash buyer? I can assist you with this. My brother and I real estate investors and also have a large network of investors interested in buying homes and apartment buildings in O’ahu, Maui, Kauai and Hawaii’i
I INHERITED A HOUSE WITH A MORTGAGE. HELP!
Also, inheriting a house with a mortgage instantly brings up a lot of questions and can result in complications. Therefore, it’s important for you to know the following:
A house with a mortgage can be inherited just like any other property.
What you need to do is make arrangements to pay off the mortgage and find out if there are any past due property taxes. If you’re inheriting your parent’s home you MUST live in the home and make required payments. However, you can often assume the mortgage and keep it in the deceased relative’s name.
Make sure you consult your lawyers and financial planners to learn any other implications that come with inheriting a house with a mortgage in your county.
DO I PAY TAXES WHEN I INHERITED A HOUSE?
Selling a house you’ve inherited can mean paying income taxes if you made a profit, while a loss incurred from sale could mean a tax deduction. There are plenty of tax implications that can come with an inherited house, so make sure to read the fine print carefully and always consult with your financial and tax adviser.
“The higher the basis, the lower your taxable gain from the sale.” states LegalZoom.
To put it in simpler words:
[property value] – [your purchase] = taxable gain
Different rules might apply due to the inheritance tax.
So yes, you do have to pay taxes when you inherit or sell your home. In the case of a sale, you need to use the same calculated method as above to discover your tax gain or loss and then report the sale on IRS Schedule D as well as your 1040 tax return – please note that this form needs to be used in the year you sell your home.
HOW DO I DISCLAIM AN INHERITED PROPERTY?
There are several reasons why you may not want to do anything with your inherited house – not even bother with the process of selling it.
Reasons to disclaim an inherited property:
- High real estate taxes.
- Avoiding responsibility of the deceased’s legal past.
- Give it to another family member.
- Other personal reasons.
Inherited property disclaimer requirements:
- It needs to be done in writing.
- It needs to be disclaimed within nine months of the deceased’s passing.
- No benefits should be made when disclaiming the property.
- The assets cannot be passed indirectly to the person disclaiming the property.
THINKING OF RENTING AFTER YOU’VE INHERITED A HOUSE?
Becoming a landlord comes with plenty of responsibilities. Make sure you read my articles on renting a property to get all necessary information on renting an inherited home.
In conclusion, inheriting a house is often a blessing to people. And regardless of debt owed, or condition of the property, talk with a trusted attorney and Realtor in order to protect your interests. Good luck