Mortgages & loans
Often when a property is inherited, mortgages and loans will have already been paid off during a lifetime of ownership. However, this isn’t always the case. Occasionally a property will have been left with a mortgage or loan outstanding meaning monthly payments will continue to fall due. In this case it will be important that you speak to all lenders as soon as possible to advise them of the circumstances. Lenders may still ask you to make appropriate plans to continue making payments. Alternatively, they may set up a payment holiday for you allowing you time to make a good number of decisions. This could really help at a time when you’re least expecting the additional burden of loan payments.
Property insurance
Properties that are left empty often deteriorate in some way or other. An empty house can become damp and attract pests. Properties can also attract anti-social behavior such as vandalism, arson or even squatting.
For all of these reasons you’ll need to put a good buildings insurance policy in place. If the property is to remain unoccupied for any length of time you’ll need to make the insurers aware of this. Almost all insurers will ask that you turn off the water stopcock, gas and electricity supplies for safety reasons. They may also ask you to carry out regular property inspections checking for condition and overall security. In this case we’d advise that you take photographs of each visit for your records. They may also increase the price of your insurance to compensate for the added risk.
Maintenance
As with all property there is always the need to carry out some form of maintenance. This could range from the everyday cutting of lawns and hedges right through to repairing a leak. We’d suggest you carry out a visit to the property at the outset and write out a full list of any essential repairs. You can then start to plan and arrange these in order of priority at a timescale to suit you. You may even be able to get a neighbor to provide access for contractors on your behalf. Bear in mind that it can be hard to find good contractors at short notice. Your Realtor is a good resource for these contacts.
Travelling & inspections
Never underestimate how much time you may have to devote to an inherited property. If the property is close to home this shouldn’t cause too much trouble. However, if the property is some distance away, you may have to think carefully over how and when to visit. The costs in both time and money could become significant as time goes by. In this case you might want to think about sharing the burden with friends and family to spread the load. You could even ask the same friendly neighbor to assist you with regular inspections.
Taxes
When it comes to inheriting a house there are three property taxes you’ll need to consider. These are:
- Inheritance Tax – the estate would have to be worth over $14m for this to take effect.
- Capital Gains Tax – minimize this by selling soon after the passing of the owner.
- Transfer or Stamp Tax – At the sale you will be required to pay $4.56 for every $1,000 of the sale price.