Ever given the idea of becoming a landlord some thought?
It may not be something that has crossed your mind before, but it’s definitely food for thought when you suddenly find yourself as the beneficiary of a property. Often the case, renting out is not a common option for many people who find themselves in these shoes.
But rather than have a property become a sitting money drain – assuming you or another family member is not planning to move in – renting an inherited home is a great way to supplement your income while still maintaining ownership of the property.
But it’s good to not base your decision solely on this rationale. You should factor in a bunch of other stuff including fees, taxes and legalities that may be involved in the process. Because as much as it can be an incredible new opportunity for some, renting an inherited home can turn out to be a money pit for others.
When Renting Makes Sense
So, what options do you have when you find yourself inheriting a home? Well, you can either:
- Disclaim the home
- Occupy the home
- Rent the home
- Sell the home
There are several reasons why people may choose to disclaim, rent or sell a home.
Some of the most obvious are that they could be owning a house in the first place – and they don’t need another; the home may be on a mortgage or taxes that are beyond a person’s budget; probably underwater or in need of extensive repairs which often tend to be costly.
Renting makes sense in scenarios where the property may be the subject of a dispute among siblings and leasing it could be an amicable agreement for everyone involved. It’s also a great idea when the inheritor doesn’t want to lose the home entirely either by disclaiming or selling it. In the process, they still manage to make some extra income on the side.
But as we said, there are a number of things you need to factor in when weighing your options. Let’s break them down into pros and cons, shall we…
Benefits of Renting out Inherited Property
Renting out an inherited home definitely has its benefits, some of which include:
- An alternative avenue to supplement your income stream
- Offers the chance to write off repairs and expenses
- Offers the chance to wait on the market to pick before selling, without the house having to sit vacant for heaven knows until when
And following are some of the disadvantages associated with renting inherited property:
- You may be required to refinance the home in your name
- You may need to pay property tax rate
- The responsibility of carrying out repairs and maintenance procedures lies squarely with you
Can I Sell an Inherited Home?
After weighing your options and you deem that disposing of the property may be the best route for you, then by all means, you can sell the house – assuming you have gotten over the emotional hurdle of this alternative.
Part of the reason many people choose to go down this path is because of the mortgage payment or property tax issue. Others may not see the need to have an additional home, while there are those who want to settle the dispute surrounding the property with siblings.
After the probate process has come to an end and the home is now legally in your hands, you can opt to sell the home via short sale or through the help of a real estate agent. This is not to mean you can’t sell the home while it is still in probate. You can, but this will entail a slew of additional fees as well as court costs.
At the end of the day, our needs are all different. What works for me may not work for Dave, and what works for Dave may not be ideal for Amanda. Weigh the options first and see what works best for you personally.
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