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Steps to be mindful of if you inherit property

It is not every day that you inherit property. But the reality is that as baby boomers pass on, it is possible that you will. In the next 20 years, it is estimated that trillions…yes, trillions of dollars in wealth will be transferred from one generation to the next. Because of this, it is particularly important to know what to do with real property in the event it is passed down to you.

This post will highlight a few things that you should be aware of. 

Property taxes – If you inherit a property, chances are that you may be held responsible for paying property taxes if they are in arrears. The best case scenario is that your loved one paid the taxes monthly along with every mortgage payment. If there are unpaid taxes, chances are that a lien will be placed on the property.

If you want to sell the property – You may not be interested in keeping the property. But if you want to sell it, you may be faced with capital gains taxes. Neverthless, you may be entitled to a “stepped-up basis” which means that the basis (I.e. the home’s current value) may be significantly more what it was originally paid for. This could help you avoid troublesome capital gains taxes.

If you choose to rent the property – Depending on the city or state the property is in, you may be required to have the home inspected so that you may certify with the proper authorities that the property is suitable to rent. You may also be saddled with making repairs and getting approval before renting it.

 

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