Important Tax Questions To Ask When Your Inheriting a House
The questions that they will get the answers to are very important so that they can plan their future wisely. They don’t have to have surprises popping up in the future.
Here is a list of the seven tax questions to ask when inheriting a house:
Is There A Mortgage On The House?
This is an important question to have answered because a person will need to make sure that the assets that are left from the deceased person can be used to pay off the home or some other way of paying the mortgage.
This is important for tax purposes. If a person cannot afford to keep the home, they should consult an estate attorney that can help them in case they wish to let it go into foreclosure.
Are you going to keep the home to rent it out?
Deciding whether to keep home is another important factor to consider. It can be rented out, and this all would have more to do with taxes too. It could be used as a second home also. All of this matters when it comes to tax time.
Many times, people are left with a home that they inherited from someone in their family that has passed away. This is something that can be very nice but troubling all at the same time.
People that are left a house like this will need to know what they are to do about taxes.
They may need to really sit down and look at all the information that is available to them so that they know what to do in the future.
Do You Want To Sell The House?
When a person dies, you will receive a notice of the fair market value of the home at the time of their death. If you want to keep the home, you will only have to pay long-term capital sales tax at the time of sale because of the stepped-up basis.
Are You Going To Live In The Home?
If you decide that you want to live in the home, you will pay higher property taxes. This is due to the cost basis of the home.
If you decide to sell the property, you will not have to pay capital gains tax if you live there for 2 out of the past 5 years.
Additional Resources
- Tips For Selling a House in During The Winter Months
- 5 Tips To Prevent Foreclosure
- Options If Your Behind on Your Mortgage
- Do I Need The Original Deed To Sell My House
- What Not to Fix When Selling a House
Will You Want To Rent Out The Home?
If you want to rent it out, you can deduct for improvements against your taxable income. This gets confusing, and an attorney would need to assist you with this.
If You Eventually Sell After You Rent It Out, What Will Happen?
In this scenario, you will need to reimburse the IRS. This is why you really want to think about this type of situation.
Should You Invest In Upgrades?
This is another question that you need to ask. Investing will make sense if it makes the house worth more when you sell it.