First off, we are so very sorry for your loss. This can be a very challenging time for many reasons, and dealing with property ownership is tough at the best of times.
You may be wondering, “I inherited a house, what to do with this house? Should I rent or sell my inherited house in Detroit? How should I sell it?”
Tons of options open for you, but…
… we can help.
We are seasoned investors in Detroit real estate, and we always are looking to buy several houses each month in the Detroit MI area. Every month we get calls from those who have inherited a house and are looking to sell that inherited house in Metro Detroit… so the info below are some tips to help you answer the question should I rent or sell my inherited house in Detroit and you can click on that link if you need an offer ASAP or just want to chat about your options.
Should I rent or sell my inherited house in Detroit, what to do next?
Below are some important considerations to help you make the right decision:
1) Make sure the mortgage is paid.
This may sound obvious, but if the person who left you a property also had a mortgage (unless it had no mortgage and was paid off, which is great!), you have to pay it (assuming you want to keep the property). Some banks will allow you to assume the loan, while others may force you to refinance into a new loan. If you are not able to qualify for a new loan, renting may not be an option for you.
2) The investment is only as good as the manager.
If dealing with brokers, maintenance, tenants, rent collection and all the nuances of property management may not be the best use of your time, hire a professional to help you or cash out now. Some people who inherit homes decide to keep the house and rent it for extra income. This is a great strategy for sure. You just need to be prepared to manage the property and the hassles that can go along with tenants and toilets.
3) Property ownership costs money.
Often it is rare to see a building that has been perfectly maintained. Most inherited houses need major improvements. This is a huge undertaking if you are looking for an answer to the question “should I keep and rent or sell my inherited house in Metro Detroit MI”.
Consider hiring a professional property inspector to give you a detailed rundown on what you may need to do within the next five years, along with estimated costs. Surprises are very, very expensive.
4) Selling a property for top dollar costs money.
If you just do not want to deal with making repairs, updating kitchens, improving landscaping and overall cleanup, you do not have to worry. We buy Detroit houses for cash, as-is.
5) If the market will continue to grow faster than your other options, hang on to the investment.
We can help you analyze the value of your property today versus the long-term benefits of renting. If you can use the equity in your property in another way that outpaces the performance of the real estate market, you should. If you just do not have anything better to do with the money and the neighborhood is rising in value, hang on – real estate can be a great investment if you know how to correctly read the market.
6) Uncle Sam wants a piece of the action.
Also do not forget to discuss your inheritance with tax and legal professionals before you take action. There are major property and income tax consequences that will dramatically impact the cost of owning your investment. This is important so I will be expanding on this topic more:
You may be wondering “what are the tax consequences when selling a house I inherited in Detroit MI?” The tax laws have been designed in a way they will not add any more burden unto you upon inheriting the property. This implies that the financial consequences are less daunting than what you would expect, which is good news for you. 🙂
Tax Consequences when selling my inherited house in Detroit, MI
Calculation of basis
To decide if you should rent or sell my inherited house in Detroit, you should know about the taxes. In order to comprehend how you will be taxed having inherited a home, you need to know how basis is calculated. Basis, in this case, refers to the asset cost for purpose of the calculation of capital gains along with other taxes. When a person dies, the value or basis of their property in Detroit is increased to the market value at the time of their death. For instance, if a person purchased a home 20 years ago for $25,000 but it was worth $100,000 at the time of their death, that property would be valued at the latter amount for the purpose of calculating capital gains.
Taxation of gains/losses
Capital gains or losses refer to what you earn from selling property that you use for either personal or investment purposes. Such can be houses, furniture and many more things. If you decide to sell an inherited home in Detroit, that sale is regarded as capital gain or loss for the purpose of income tax. In most cases, for you to qualify for lower rates of long-term capital gains, you are required to have held that property for at least a year. However long the duration you have been in ownership of an inherited home, any gain or loss will still be treated as long-term.
Reporting the sale
Upon selling an inherited home, you have to report it for income tax purposes. You should first calculate your capital gain or loss. This is done by subtracting the basis from the sale amount. You should then report that amount to the necessary authorities.
Having an inherited home can be stressful given the fact that you have new property to take care of and pay taxes for it at the same time… You should go through the probate process in Detroit as the first step to selling your home. The court will then authorize you to proceed as you wish. If there are any other individuals involved in the inheritance, you should first agree with each other on that decision. You can then file a petition requesting the court to allow you to sell the property.
You should then consider how much tax you are to pay. This will be paid against the capital gains or losses resulting from the sale of the house. You can call Amaze Properties LLC now at (586) 991-3363 to undertake a smooth and legitimate sale of your home. We are local here in Detroit MI and we know the market here better than anyone else. If you are still asking yourself what are the tax consequences when selling my inherited house in Detroit, then we would be happy to discuss it with you in more detail.
7) Consider all your options.
In certain situations we may be able to help you structure a lease-option agreement that allows you to rent and sell at the same time – capturing the best of both worlds. These kinds of deals can be complicated, but our Clinton Township investment experience can help you win.
8) Compare a few scenarios.
We can help you determine prices for any property near Clinton Township – if you sold it today without doing any work, the highest price the market will give you, and the projected value of keeping it as a rental (along with the costs).
Selling an inherited house can relieve you of quite a burden. In addition to that, selling the property to an investor is a basic simple, and fast process. Contact us for inquiries on how to go about things when selling your home in Detroit and we will be glad to help you.