No one is saying it’s a bad thing.
Of course, it isn’t a bad thing when someone leaves you a house.
Well, it isn’t all bad anyway.
But surprisingly enough to many, it isn’t all good either. So what happens when you inherit a house?
However, since none of those good things are hard to recognize or understand, this article is for anyone both lucky enough to be in this position, and unaware enough to not know about some of potential pitfalls.
Here are what many would consider the top 3 bad things you need to know if someone leaves a house to you.
Unless you inherited what qualifies as “mansion” worth in excess $5mill, federal tax won’t be anything you need to be worried about. State taxes are another, less happy matter.
Some of it will depend on where the person who left you the property lived before they died.
Luckily even these lower income based taxes usually only come into play if the home is valued close to $1 million, but some states will send you a new tax bill for less than $700,000. If that isn’t an issue there’s still the aspect of the always unpopular “inheritance tax” which can rates up to 16% or so, which can be costly if you don’t have the cash on hand.
Property Taxes of course are another added cost which can come into play and again, vary depending on the state those taxes apply. Thankfully though, there are plenty of tax estimators and tools available online, and in most cases, for free.
#2 Related Costs and Fees
You haven’t even had a chance to move in, and you find out about all the less fun aspects that come from home ownership. Liability insurance, roof replacement, flooded basements, faulty wiring, termites, or a broken down air conditioning unit no longer covered by the home warranty contract that just expired.
That doesn’t even count things like cranky neighbors, lawn care costs, and that potential mold problem waiting for you to discover. It could be a good idea to have a home inspection to find out more about what you’ve gotten yourself into before you actually move yourself into it.
Assuming all of that is resolved in your favor, you might need to plan a weekend or find some cash in order to have the furniture, possessions, and property grant deeds of the previous owner. This is especially true of course if those things weren’t included in the inheritance or were specifically left to someone else.
Moments like that can be not only physically draining but emotionally difficult. Definitely, things you’ll want to think about before loading up the Uhaul, or filling out that “change of address” form at the local post office.
#3 Shared Ownership
If it turns out you’re better off not holding on to your new estate, you may want to cash out and get out before committing to so many mini projects. If that’s the case, it’s important to know if you’re the only proud new owner, or if you’re sharing the title with your siblings or relatives of the homeowner.
If that’s the case, you’ll need them to sign off on whatever you have in mind. Or, you could ask if they want to buy your percentage of ownership and make things easier for everyone.