When a family member dies, one of the things you have to handle is the inheritance. While the cash and material possessions are easy to handle, one asset that you might have to struggle with is real estate. Whether it is your childhood home or expansive farmland out in the middle of nowhere, it can be not easy to handle inheriting property. To help make it easy for you, here are some tips so you can get full advantage of it.
Move Fast
The first thing you have to understand is that you have to move fast when it comes to inherited property. There are a lot of time-dependent things associated with the property. For one, you might have to handle the actual transfer of property. Sometimes, real estate is held in trust by a third party until the inheritor does the legal paperwork. The payment for this comes from the property’s value. This means that the longer it is held in trust, the lower its value it becomes. The holders might even end up selling it if it is left to them for years. Another concern you will have to deal with quickly is the taxes and government fees. If left alone, they pile up. Some delinquent inheritors end up paying thousands of dollars in back fees and taxes when they came to claim the property just a year later.
Do A Survey And Assessment
When you get your inherited property, you should then take note of its value. Knowing the full value of a property will allow you to make the correct decision on how to deal with it. It also determines how much tax you have to pay on it. A lot of assessments are done on a schedule, depending on the location of the property. If your inheritance is out of state, you might need to familiarize yourself with their schedule. If the current fiscal year is not over, you might even use the previous assessment as the basis of the property’s value.
Smaller properties are easy to handle, but if your new land is large and is mainly empty, you might want to do a professional survey. This gives you a current map of your property. While normal surveying can take weeks, 3D scanning companies can do a survey quickly if you need it.
Talk With Your Relatives
One issue you might have to deal with is that the relative who willed the property to you might have made you one of the multiple heirs. This happens when the will states that the estate has to be equally divided among the heirs. This might mean that a small property ends up being divided into smaller plots, making it useless. It would be best if you talked with the other heirs to see what they plan to do with their share. You need to agree on what to do with the property so that it retains its value. This might mean one heir selling their part of the property to the other or a contract for property-sharing.
Pay Off The Duties And Taxes
With all that out of the way, the most important duty comes up: paying all of the debts and taxes associated with the property. There are several taxes that you will have to worry about. Estate taxes are the least of your worries since they come out of the deceased’s estate, but you may end up paying it if the estate is out of money. Your main worries are the inheritance tax, which is based on the net worth of the estate. Next, there is the property tax that goes to the local government. Finally, the capital gains tax is what you have to pay if you sell the property. There might even be transfer fees for the property. This might end up eating into your funds so you’ll need to make a decision.
Making A Decision On What To Do With It
For those who see the taxes coming and don’t want to be burdened with it, the simple answer is to sell the property and use the earnings to pay off all the taxes. The remaining money can now be considered your inheritance. If the land has a house, then you might move into it as your new home. You can also develop the land or rent it out, which can potentially earn you more money in the future.
Inheriting real estate can be a really big windfall, but it can also quickly become a burden. You need to make a decision on it and ensure that it doesn’t become a liability. Untangling all the legal, financial, and emotional issues around the inherited property can be difficult, but it will be worth it when it is done.
