Many people inherit their parent’s property after their parents pass away. In this time of grief, having to then deal with ownership of a new property can sometimes feel like an extra burden, but in many cases it can be positive thing. A new property gives you lots of options that could improve your future. Here are several steps to take when dealing with an inherited property.
Start with the possessions
First, you need to decide what you’re going to do with your parent’s possessions. Some of these possessions may have been left to other people, in which case it’s their responsibility to collect them and deal with them as they wish. If all the possessions have been left to you, you have the difficult job of having to sort through them deciding what to keep and what to give away.
It’s best to get help from someone else when sifting through these possessions as it can be physically and emotionally difficult. If there are possessions that you’re unsure of how to manage, you could also consider hiring removalists and putting them in self-storage temporarily until you know what you want to do with these items. Certain items could be valuable – if you’re selling any possessions that are over fifty years it could be worth getting them professionally valued first.
Weigh up your three options – sell, rent or move in?
Your three options are to sell the property, rent it out to tenants or move in and make it your own home.
Selling the property is the most common route – this could help to pay off inheritance tax and potentially any mortgage left to be paid off on the property. Hopefully, there may even be some profit from the sale which you can then use at your own leisure. If you don’t live locally, you may want to get help from a local agency when selling who can manage viewings and advertise in the area.
Renting the property to tenants requires a little bit more work. Before you can get tenants to move in, you may have to switch to a buy to let mortgage and set up various paperwork. Going through a local property agency or hiring a local property manager could prevent you having to stick around to meet your clients’ needs – instead someone local can find and screen tenants for you, attend to repairs and chase late payments.
The final option is to move in, which could be worthwhile if the property is local. Not only will you be able to keep onto sentimental memories, you may have a property that’s mortgage free. It could even be a way onto the property ladder if you don’t own a property already. If you’ve got a property already, you can sell or rent this for profit whilst making your inherited property your new home.
Don’t forget about inheritance tax
If the property is over a certain value, you may have to pay inheritance tax which is 40% of the property’s value. You’re given 12 months to pay this. On top of inheritance tax, you may have to pay capital gains tax if you’re selling the property and it has risen in value since you received it. Selling the property should cover these costs, however you may have to pay them out of your own pocket if you’re moving in or renting out the property.