Equity Arizona Real Estate
Equity Arizona Real Estate
Ian Chait, Equity Arizona Real EstatePhone: (602) 430-5572
Email: [email protected]

Selling or Renting an Inherited House

by Ian Chait 05/02/2021

Photo by Dave Frisch from Pexels

If you've inherited a house you'd rather not live in, here are some things to consider—before you accept it. Before we get to the selling or renting part, calculate the cost of:

  • Repairs and renovations.
  • Any debt that would pass to you with the home.
  • Annual property taxes.
  • Yes, you may decline your inheritance if it's too burdensome to accept, as long as you're not already named on the deed, and as long as you meet applicable deadlines for submitting a notarized disclaimer of interest form. 

    Now let's look at selling or renting.

    1. Selling an Inherited Home Can Produce High Tax Savings. 

    The federal tax treatment of an inherited home, when sold, can be highly supportive of a deceased homeowner's loved one or family. 

    Under IRS stepped-up cost basis rules, you may sell without paying tax on the gains that accrued since the deceased homeowner first bought the house. You'll pay capital gains tax only on any increase in the property's value between the time you inherited and the time you sold. These savings alone can be a great gift to you. 

    Inheritance taxes are not a major factor for most homes, and that factor is easily checked.

    2. Working Out a Shared Inheritance Commonly Means Selling.

    Are you one of several beneficiaries? Does everyone agree on what to do? One sibling may wish to sell. Another might want the house. These factors typically mean someone will sell their inherited interest.

    Selling after a loved one has passed away is quite often the best decision for all concerned. It relieves family or other loved ones of the costs of repairs and upkeep, utilities, taxes and insurance. It also ensures that everyone receives an equal share of the gift.

    3. You Could Have a Choice of Which House to Sell or Rent. 

    If you inherit a free and clear title, you can move into your inherited home, and enjoy it without debt, while selling your current home. Be sure to use the time when the home is in probate to speak with your real estate agent about preparing the home for sale.

    Renting out the house for investment income is another option. Your real estate agent can check for any zoning restrictions and offer you further pointers.

    Tip: If you rent out the home it won't be a primary residence, so it won't get the capital gains tax benefit when you ultimately sell the home. Yet certain rental property spending is tax-deductible, and rent-related income has a low tax rate.

    Need Advice to Fit Your Situation and Today's Market? We're Here to Help.

    Inheriting real estate can put a lot on your plate. Your real estate agent can advise you step by step, offering indispensable knowledge when you need it most. 

    About the Author
    Author

    Ian Chait

    Hello, my name is Ian Chait. I’m a professional, full-time real estate agent and designated broker of Equity Arizona Real Estate based in Scottsdale, Arizona. After the opportunity to see the world from touring in the mid ‘80’s as a lead vocalist, I settled in Phoenix, Arizona. It’s at this point, I secured my first investment deal that began my life-long career in the Real Estate business. Along the way, I’ve assisted in hundreds of transactions that provided me the real-life education providing me the knowledge, the skill-set and the expertise necessary to become the top tier agent I am today. I’ve earned a solid reputation among my peers and have been fortunate to make many friendships with repeat clients and their families along the way. During the early 2000’s, I obtained a Bachelors Degree in Finance and Accounting from the University of Phoenix.