So, you have inherited a house, while this may sound exciting, the reality is less than a pleasure. The truth, however, is that you have inherited expenses along with the house. Well-intentioned loved ones all too often leave their property in their will to beneficiaries that are already struggling to afford their monthly bills. Often, these homes are in a severe state of distress and require a great deal of upfront cash flow for rehabilitation to turn into a desirable property.
Perhaps you already have your dream home and have no interest in residing in the property but feel a sentimental attachment. While it is understandable, the value of sentimentality won’t pay for the reality of carrying the cost of an inherited house. This harsh reality often leads to the ultimate decision to sell the property. Whatever you decide to do, don’t delay in caring for the property. An excellent place to begin managing your inheritance is locating the contact and payment details on existing expenses.
We’ve gathered a list of typical monthly payments to help you with a starting point. Read on to learn about all of the costs of holding onto an inherited house in Phoenix.
Financial Implications of Keeping an Inherited Property in Phoenix
Taxes
Property taxes will still be due on the property when you hold onto an inherited house in Phoenix. These tax payments may or may not be a part of your monthly mortgage payment. Even if the mortgage is free and clear, annual property taxes will always be due. They will likely rise significantly because tax collectors will reassess the rate at the current market value.
Insurance
Depending on the amount remaining on any mortgage, you may be responsible for mortgage insurance and property insurance while holding onto an inherited house in Phoenix.
Assumption of Mortgage
Often, you can assume the mortgage if you hold onto an inherited house in Phoenix. The wording of the original contract may be the determining factor in your ability to assume the mortgage. If they had a reverse mortgage, you would need to pay the loan off to keep the property.
Utilities
While you are not necessarily obligated to pay the utility bills under the name of the deceased, if you’ll be residing in an inherited house in Phoenix, you will want to keep the payments timely. Otherwise, they would become a lien on the property and taken out of the profits when sold.
Maintenance
Should you be considering maintaining ownership of the property, it would be advisable to have a professional inspection done to understand what you are getting into fully. Depending on the length of time that the house has been vacant and the state of repair the property is in, holding onto an inherited house in Phoenix could become extremely expensive to maintain. Monthly expenses for repairs on older properties can easily equal or exceed mortgage payments.
Yard
It is often effortless to tell which homes are vacant because the yard has become tangled and unmanaged, adding to the distressed appearance. Unless you have spare time, you will need to ensure that the yard is appropriately maintained when holding onto an inherited house in Phoenix.
Legal Considerations
When you inherit a property, there are several legal aspects to consider. First, you’ll need to go through the probate process, which is the legal procedure for settling the estate of a deceased person. This process can vary in length and complexity depending on the state laws and the specifics of the estate. It’s advisable to consult with an attorney who specializes in probate and estate law to guide you through this process.
Property Valuation
Getting an accurate valuation of the inherited property is crucial. This will help you understand its current market value and make informed decisions about whether to keep, sell, or rent the property. You can hire a professional appraiser to conduct a thorough evaluation. Additionally, real estate agents can provide a comparative market analysis (CMA) to give you an idea of what similar properties in the area are selling for.
Renovations and Repairs
If the inherited property is in a state of disrepair, you may need to invest in renovations and repairs to make it livable or marketable. Prioritize essential repairs such as fixing structural issues, plumbing, and electrical systems. Cosmetic upgrades like painting, landscaping, and updating fixtures can also enhance the property’s appeal. Keep in mind that extensive renovations can be costly, so it’s important to budget accordingly and consider whether the investment will yield a good return.
Renting the Property
If you decide not to sell the inherited property, renting it out can be a viable option to generate income. Before renting, ensure that the property meets all safety and habitability standards. You’ll also need to familiarize yourself with landlord-tenant laws in your area, which govern aspects such as security deposits, lease agreements, and eviction procedures. Hiring a property management company can help you handle the day-to-day responsibilities of being a landlord, such as tenant screening, rent collection, and maintenance.
Financial Planning
Inheriting a property can have significant financial implications. It’s important to assess your overall financial situation and determine how the property fits into your long-term goals. Consider consulting with a financial advisor to help you navigate the financial aspects of inheritance, including tax implications, investment strategies, and estate planning. They can provide valuable insights and help you make informed decisions that align with your financial objectives.
Emotional Considerations
Inheriting a property can be an emotional experience, especially if it was the home of a loved one. It’s important to acknowledge and process these emotions while making practical decisions about the property. Take your time to go through personal belongings and decide what to keep, donate, or discard. If the emotional burden becomes overwhelming, consider seeking support from friends, family, or a professional counselor.
Selling the Property
If you decide to sell the inherited property, there are several steps to take to ensure a smooth transaction. Start by choosing a reputable real estate agent who has experience with inherited properties. They can help you market the property, negotiate with buyers, and navigate the closing process. Be prepared for potential challenges, such as dealing with multiple heirs or addressing any legal issues that may arise during the sale.
Tax Implications
Inheriting a property can have tax implications, including estate taxes, capital gains taxes, and property taxes. It’s important to understand these tax obligations and plan accordingly. For example, if you sell the property, you may be subject to capital gains tax on the difference between the property’s value at the time of inheritance and the sale price. Consulting with a tax professional can help you navigate these complexities and ensure compliance with tax laws.
Long-Term Maintenance
If you decide to keep the inherited property, it’s important to plan for long-term maintenance and upkeep. Regular maintenance tasks such as cleaning gutters, servicing HVAC systems, and inspecting the roof can help prevent costly repairs down the line. Create a maintenance schedule and budget for ongoing expenses to ensure the property remains in good condition.
By considering these additional factors and taking a proactive approach, you can effectively manage an inherited property and make informed decisions that align with your financial and personal goals. Whether you choose to keep, sell, or rent the property, careful planning and professional guidance can help you navigate the complexities of inheritance and make the most of your new asset.
Unless you have a plan for the property, holding onto an inherited house in Phoenix is costing you money. Oak Street Properties will pay you a great price and close when you are ready. If you don’t feel that you can handle the emotions of going through the possessions of your loved one to clean out the property, you can leave everything in place or take what you like, Oak Street Properties will handle the rest for you. Call Oak Street Properties at (480) 637-5500 or send us a message today!