An Inherited House: Windfall Or White Elephant?
The laments about how people born after 1985 will never be able to afford to buy a house have become old news. You are wise to focus on the silver lining of that lament if it applies to you, the part that says that you will only be able to afford to buy a house if your parents own their house. Sometimes that scenario plays out in the form of homeowning parents giving their offspring money to pay toward a down payment. Other times the parents create generational wealth by co-signing on a mortgage loan for their children. Of course, one of the most ostensibly straightforward ways for the parents’ homeownership to translate into generational wealth is if the children inherit the house from their parents. At first glance, inheriting a house looks like a dream come true; as soon as probate settles, the house is yours, without you making a single mortgage payment on it. If your parents’ estate is in probate and you need advice about what to do when their house legally becomes your property, contact a Tampa probate lawyer.
Be Thankful for the Capital Gains Step Up
Capital gains tax used to cast a dark shadow over the transfer of real estate properties through inheritance. If your parents bought their house in the 1970s and you inherited it in 2026, its current value is now many times what they paid for it when they bought it. It would not be much of a windfall if you were suddenly responsible for paying taxes on the value that had appreciated over all those decades. Fortunately, the current laws assess capital gains tax for inherited properties on the value of the house at the time of the testator’s death. The house is unlikely to appreciate by a substantial margin during the length of the probate case, so you will not have to pay much in the way of capital gains taxes on it.
Should You Keep the Inherited Family Home or Sell It?
Of course, when you inherit a house, you inherit all the financial obligations that go with it, from property taxes to reverse mortgages. Whether you choose to live in the house or rent it out, the cost of repairs will be your responsibility. If you decide to sell the house, you can sell it as a fixer upper or make the repairs before you list it on the market. If you alone inherited the house, you have the final decision about these matters. If you inherited it jointly with your siblings, things are more complicated. One sibling can buy out the other siblings’ shares, but only if that sibling has the funds to do this. Beyond that, you and your siblings must agree on a sale price and, if applicable, on a budget for repairs before listing the house for sale.
Contact David Toback About Real Estate Properties in Probate
A Central Florida probate lawyer can help you keep the peace if you jointly inherit a house with your siblings. Contact David Toback in Tampa, Florida to set up a consultation.
Source:
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