When a loved one dies, getting an inheritance doesn't always work out in your favor, especially when it's real estate that you don't want to take on. If you live in a state with an inheritance tax on property, you may find yourself facing a generous tax bill. You may have no idea what to do with the property, either.
The reason you may not want to keep the property that someone has left for you does not matter. The important thing is to know you have options and simply need to explore what will work best for you. Keep reading to find out options available to you and how to navigate a tricky inheritance situation best.
If the property you inherit is in good condition and you choose to keep it, you could turn it into a rental property to create a passive income stream. However, having to manage a rental property can be a learning curve and comes with a lot of work in dealing with tenants.
Hire Professionals To Manage The Rental Property
If you choose to rent out the property and don't have time to deal with tenants, or if your property is in another state, you can use a management company to oversee the rental property for you. Be prepared to pay a management company about ten percent of your rental income.
Sell With a Realtor
You can choose to sell your property. To get the most out of your property, enlist the help of a professional. A realtor can help you get a higher price and make the process a lot easier by handling all the hard work that comes with selling a property. However, it's essential to keep in mind commissions and other costs associated with the sale.
You will be paying the price for a smoother, more convenient process. The real estate agent will get a commission, typically six percent of the property sale price. You may be required to make repairs, painting, and touching up the landscaping.
Fix The Property and Flip It
If you inherit a property that is not in good condition, and you happen to have extra cash on hand, you could take advantage of the opportunity to re-do it and flip it for a profit. However, you'll need to keep in mind that you may be required to pay a capital gains tax of up to twenty percent on the profit.
Sell The Property To a Home Buying Company
Selling unwanted inherited property to a home buying company is a quick way to sell and make money without having to go through any lengthy processes'. A home buying company will be able to buy your home as-is, allowing you to save time and money.
A reputable home buying company will be able to offer you cash for your home and offer a quick closing to allow you to finalize everything in your own timeline. Keep in mind, it's important to work with a company that has experience with buying inherited homes so they are able to guide you through the entire process.