Inheriting real estate is rarely the ideal situation that many envision. The responsibilities that come along with inheriting a property can be extremely overwhelming, especially if you were not anticipating keeping up with the maintenance or dealing with managing the property. While we would rather inherit property than none at all, often the property is an emotional and financial burden that causes undue stress. Below we review the top 5 items to consider when inheriting property in Lancaster, PA.
Financial Responsibility To Any Outstanding Debts
One thing you should know about inheriting real estate in Lancaster is that the recipient of an inheritance of real estate is financially responsible for the property. This includes any outstanding debts attached to the property, including liens. Additionally, you are now responsible for all upkeep. If the property is an investment for rental income you may now also be taking on the duties of being a landlord, which brings along more responsibilities and demands on your time. You will also owe property taxes and possible homeowner’s or property owner’s association fees. Often these associations have strict guidelines that must be adhered to regarding the maintenance and appearance of the property.
Repairs and Updates
The frequency and expense of repairs begin to increase at a quicker pace as homes age. This in turn increases the risks and expenses involved with inheriting real estate in Lancaster that is not new or in pristine condition. Whether your intent is to live in the property or list the property, you should take steps to educate yourself on the condition of the home from the foundation to the top of the roof. You will want to save yourself from catastrophe by investing in hiring a professional inspector to fully understand the task that lay ahead. It is highly recommended that you contact at least three professionals for each type of repair, usually, you will find that contractors greatly vary in price and quality. Keeping in mind the costs of holding a property continue despite the status of the repairs, be certain to get estimates of both the time frame and total overall cost involved.
Cleaining out Personal Property
Inheriting real estate in Lancaster can be a very emotional time and may even make it difficult or impossible for some to even enter the property. Regrettably, you will need to either remove all of the personal property of the deceased from the property yourself or hire professionals. Depending on the condition of the property, and the tendencies of your benefactor, this could literally mean going through mountains, clutter and decades with of belongings. Delaying the process to avoid painful memories can be extremely costly, delaying repairs on the property lowers the value as it continues to deteriorate.
Dealing with Tax Implications
Whether or not you believe you believe you will personally ever inherit real estate, it is one of the most common items passed on and the tax implications are something everyone should have at least general knowledge about inheriting real estate in Lancaster. Under the Unified Gift and Estate Tax system, estate tax is based on the value of the property transferred through inheritance, which is calculated based on specific guidelines and includes possible deductions. While often no federal estate tax is owed as the beneficiary, this is not always the case. Every American currently is allowed to inherit up to 11.18 million. You will also want to be certain to investigate gift tax as well. In Pennsylvania, there is currently no estate tax or gift tax, though that doesn’t mean there won’t be one in the future. There is however an inheritance tax in Pennsylvania with rates varying based on the relationship to the deceased. There is a 4.5% tax applied to transfers to direct descendants and other lineal heirs like grandchildren. There is a 12% tax on transfers to siblings and a 15% tax on transfers to any other heir, with the exception of charitable organizations, exempt institutions and government entities that don’t pay tax.
Buying Another Property
Because you incur the financial responsibilities along with the property, if you were on target to purchase your dream home, everything may have just changed dramatically. One of the major changes may just be in the eyes of your lender when inheriting real estate in Lancaster. Depending on the remainder of the mortgage and any other expenses that are now in your name, your debt to income ratio may now mean you no longer meet the guidelines to qualify for a loan. Remember you need to keep a debt to income ratio under 40% in order to qualify for most mortgages. Additionally, the outlay for repairs is likely to deplete whatever savings you have managed to gather in anticipation of your plans.
For many, holding onto an inheritance of real property is much too time-consuming or simply not financially possible. There is a simple and quick solution that will easily eliminate any concerns about inheriting real estate in Lancaster. Working with 717 Homebuyers allows for total convenience, with zero showings or open houses. Just pack what you want and leave the rest behind. We will handle all the paperwork for you, working to make sure the closing process goes smoothly. The price that we say you will receive is what you will receive at closing, no hidden fees or junk charges. If you are ready to sell your inherited house in Lancaster pa and want to deal with serious buyers, give 717 Home Buyers a call today.