3 Criteria for Deciding Whether You Should Sell or Keep Your Parent’s House
To sell or not to sell, that is the question.
When you’re inheriting your parent’s house, a wave of emotions may unexpectedly wash over you. Perhaps this property holds cherished childhood memories. But with soaring home values, high interest rates, and rising property tax rates, your inheritance may feel more like a burden.
When inheriting a house, should you just sell it or keep it?
Making Wise Decisions When Inheriting a House
Honestly, it’s normal to experience a spectrum of positive and negative emotions when inheriting your parent’s house. But don’t let an emotional state of grief cloud your judgment. It’s important to focus on the situation and make the best decision for you.
Here are three criteria to focus on when deciding whether to keep or sell an inherited estate. Base your decisions off:
- The condition of the house
- Your personal financial and social situation
- Your financial goals
1: Do the Math: Consider the House’s Current Condition
Whether you’ll keep your parent’s house or sell, it is imperative that you take some time to assess the condition of the house. You can hire an inspector or ask a knowledgeable friend to help. This inspection will help guide you next steps.
WITH THIS INFORMATION, you’ll be able to make educated decisions on imperative issues such as:
- What repairs are necessary?
- How much will the repairs cost?
- How long will the repairs take?
- Can you afford to pay for the repairs?
- Do you want to pay for the repairs?
- What do the other beneficiary(ies) think?
- Will I get a reasonable return on my/our investment?
- Will keeping the house cause more headache than benefit?
- Can your budget (and any co-heirs’ budgets) withstand periods of time when the house isn’t occupied?
- Will you hire a real estate agent?
2: Reflect On Your Personal Situation
Consider whether you have the financial means to maintain this house in the coming years. There will be necessary repairs, property taxes, utility bills, etc. (Don’t neglect to consider special tax issues like capital gains when inheriting a house and increases in property taxes)
Do you already live near the inherited property’s locale? If so, is the house in a location where it makes sense for you to either relocate or keep a vacation home?
If your siblings are beneficiaries also, you may desire to buy out their shares in the property. If not, you’d all have to be in agreement with them and their spouses about owning this property together and managing it together for years to come. (If one person changes their mind down the road, you’d run the risk of having to come up with capital to buy them out. Then, you may end up having to sell the property after all.
3: Reassess Your Goals
Sure, the estate you’ve inherited may include sweet childhood memories. But does the locale offer you concrete ways of achieving your personal, financial, and professional goals?
As beneficiary, it’s easy to start dreaming of dabbling in the role of a landlord. After all, renting out a property with potential monthly cash-flow could positively alter your financial situation. But do you have prior experience renting properties? If not, factor in what it would cost to hire a property manager or the amount of time it would take for you to learn to be a landlord.
Will you have funds for property taxes, insurance, or advertising vacancies? Or will this inherited house eat away at your free time, drain retirement savings, sink your bank accounts, and compromise long-term dreams?
What Will You Ultimately Decide?
Inheriting a home brings its own set of emotions and challenges.
Selling an inheritance that’s shared with co-heirs is usually the quickest way for everyone to benefit. It involves less risk than managing a rental.
But renting your parent’s former property could provide lucrative monthly income.
Meticulously research the details about the state of the inherited house, consider your personal situation, and reassess goals. The answer to the question of “To sell or not to sell?” your parent’s house will be revealed.
For property inheritance matters, contact Matthew C Yu Estate Planning Attorneys in Torrance, California for legal assistance.