For most people, their most valuable asset is their house, and it’ll often be left to their children or grandchildren. While this is a lovely gift from your deceased relatives, it can leave many people wondering what to do with the place.

Luckily, there are lots of options available depending on your finances, your emotional attachment to the house, and your future plans. Here are some things you should consider doing when you’ve inherited a house:

Get financial advice

Rules on inheritance tax vary from country to county, and if you’re sharing your inheritance with siblings or other relatives, then things can get more complex. Property is part of a deceased person’s estate, so there may well be debts to pay, and it is worth getting some independent financial advice to discuss the tax implications if you were to sell versus keeping it as a second property.

There may also be a remaining mortgage on the property, so you may inherit the responsibility for payments. If this is going to cause you financial difficulties, then it’s worth speaking to Citizens Advice or seeking legal help.

Moving into the property

If you have a strong, emotional attachment to the property, then it might be a natural choice to move into the property. If the home was owned outright by the deceased, then you may be mortgage-free, but if it was part-mortgaged, then you may need to apply for your own mortgage for the percentage not yet paid. Another thing is to consider is whether you’ll be selling your old home.

If you have two homes because you’ve inherited one, you’ll need to let HMRC know within two years which one is your ‘main residence’, if you sell the one that is the extra, you may have to pay capital gains tax.

Sell up

One of the most popular options is to simply sell the property, as this can mean a cash lump sum, plus less hassle having to deal with upkeep. Again, you’ll need to consider things like capital gains tax, estate agent fees, and other expenses.

Some people use services such as Quick Move Now to sell an inherited home, as it means they’ll get a quick cash sale without fees. Whichever way you sell, if the estate is worth over a certain amount, currently £325,000 in the UK, then inheritance tax will also be payable.

Rent it out

If the property is owned outright, then renting it out could be a good money maker in the long term, and it gives you time to consider your options. Rents are getting higher in many places, but it’s worth noting that landlords now pay more tax due to changes in the 2015 budget. You’ll have to pay taxes on your annual turnover, and if you have months where the property is empty, then this means no income.

It’s important to do your research and ensure you’re actually making a profit each month, and don’t forget to keep money aside for landlord insurance, repairs, and other expenses.

If you’ve recently inherited a property, make sure you make the most of this wonderful gift by getting proper financial advice. It’s worth considering all your options before you commit to anything, and you’ll need to ensure that you find out which taxes you’re liable to pay. However, whether you take the short term option and sell the house, or decide to rent it out for a long term income, you could potentially make a lot of money from your relative’s home.

What Are Your Options if You Inherit a House? is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

It hasn’t changed at all since we looked last year, but I think it’s good to get it down in writing so that if we are completed enamoured with a home that goes against our basic principles, we can refer back to save ourselves from future despair.

Budget

I’m uncomfortable with publishing numbers on the blog as far as what we would be setting for a budget, but as a ratio of our take home pay, we would not be comfortable spending more than 25% of our combined after-tax income, including property taxes.

This should be able to afford us a decent house in one of the suburbs of Vancouver.

(I am not including the down payment in this percentage because of closing costs, title insurance, lawyer fees, inspection, appraisal and PMI)

Type of Home

J refuses to consider anything where we will have to pay strata (HOA fees for Americans), about which I agree with him. Strata is a huge waste of money, and the value of condos and apartments don’t go up; it’s the value of the land that increases, so we’ll be looking at a house in the suburbs. We wouldn’t be able to afford a house in Vancouver and I’m not much of a big city person for the long term.

We want a chunk of land larger than 8,000 sq feet, but the house doesn’t have to be very big.

Must-Haves

We don’t have all that much on our “must haves” list because J is a carpenter and there is not much he can’t do. But what is on the MUST HAVE list is:

• A two story house (for a basement suite = rental income) OR a house with a detached garage/carriage house
• 3+ bedrooms
• Good bones (no hazards)
• Quiet street

Yes, that’s it. I don’t care if it has the ugliest kitchen in the world, or only one bathroom; we can add on, renovate, and fix things for almost free (my father sells building supplies, J is a carpenter). 

I would really like to purchase a house for a really good price that requires some work (as long as it has good bones). I would love to renovate and make it my own; I don’t like the thought of living in a newly renovated house because that was the previous owner’s preferences, tastes, and vision. Plus, we would have to pay more for somebody else’s taste! No thanks.

The Perfect House

If I could buy the perfect house, it would be a court-ordered sale (foreclosure for you Americans). Not many people can buy them, because of timing and subjects; if you are already a home owner, you need to have the house that you previously owned sold already prior to buying one.

Plus, the timing is always tricky. But because we rent right now, I am okay with timing and we don’t own a house yet so buying one is a great way to save a few thousand dollars.

Ideally, it wouldn’t be all that nice and we could fix it up. The house we were looking at last year was nice on the top floor but the basement suite needed work; I thought that would be ideal.

It was also a court-ordered sale, and the Realtor thought he could get it for $330K – a price unheard of for this area.

So, this is our ideal situation. Does it seem realistic?

Home Buying: What We Want is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.