No one is prepared for when a loved one dies. The emotional toll can’t be predicted, and lasting impact can’t be expressed. One of the least mentioned topics includes the logistics, because who wants to think about that anyway? Despite the utter unpleasantness of the topic, it remains to be seen that when a loved one passes away, they may leave you something you weren’t prepared to deal with. Surprise! They willed you a rental property. What do you do now?
No one is prepared for when a loved one dies. The emotional toll can’t be predicted, and lasting impact can’t be expressed. One of the least mentioned topics includes the logistics, because who wants to think about that anyway? Despite the utter unpleasantness of the topic, it remains to be seen that when a loved one passes away, they may leave you something you weren’t prepared to deal with. Surprise! They willed you a rental property. What do you do now?
Death and Taxes
The only thing that is constant in life is death and taxes, and you will be taxed on your loved one’s rental property. No matter how long you wait to sell, you will be taxed on the profits that you make. The amount of taxation will depend on where you are, so ask a lawyer in your area about the specifics. If you do not keep it, you will have property taxes to consider as well.
According to Business Insider, Alabama and Hawaii have the lowest property taxes. Alabama is at .42%, but with the low property value, it comes to an average annual tax of $558. Compare that to Hawaii that has an annual tax of .27%, yet the average annual tax on that beach-front property goes to an average of $1,529. From there, it all goes up. California’s tax rate is around .77%, and the average annual tax reaches $3,141. Maryland seems to take the cake with 1.1% taxes, and their average annual amount is $3,257. When you are decided what to do with your inheritance, keep numbers like this in mind.
This information may be covered in Probate, a legal proceeding after someone has died. With lawyers present, the court will check that the will and testament is valid, property is identified and appraised, and taxes are paid.
Tenants
If you are inheriting an established rental home, there is a good chance that you have to deal with tenants who have made their home on your newfound property. Maybe your loved one talked about them before, maybe you know the gist of who they are, or maybe you have absolutely no idea.
If it is true that you have never been a landlord before and you have no clue what to do, here’s a phrase you should get used to reading: ask a lawyer for more advice. They may know the local areas laws on reading up on your tenants. Do you have legal right to your loved ones notes on why they chose these tenants? Did they keep the background checks and are you allowed to see them or other identifying information? Is the lease signed using the departed’s personal name, or a business such as a LLC, and when does this paperwork need to be updated for new ownership?
You will want to introduce yourself sooner rather than later. These tenants probably know about the death of their landlord and are rightly very worried that you will end their tenancy. This is their home: it is best to meet them and tell them your plans, whether to sell as a personal home, sell with tenants so that they just get a new landlord that isn’t you, or keep and act as property manager (or hire a property manager).
Property Managers
Speaking of hiring a property managers, it may be something to consider. If you have inherited a property, for reasons both sentimental and practical, you may be thinking of keeping it. If you have no experience as a property manager then it may be smart to think about hiring one to do the complicated leg work for you. Becoming a property manager takes a bit of work, and you want to make sure you hire the right one if that is the right choice for you.
In the end, it is your decision what you do with your inheritance. During such a loss, you should take your time and make sure whatever action you take is right for you.
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Death and Taxes
The only thing that is constant in life is death and taxes, and you will be taxed on your loved one’s rental property. No matter how long you wait to sell, you will be taxed on the profits that you make. The amount of taxation will depend on where you are, so ask a lawyer in your area about the specifics. If you do not keep it, you will have property taxes to consider as well.
According to Business Insider, Alabama and Hawaii have the lowest property taxes. Alabama is at .42%, but with the low property value, it comes to an average annual tax of $558. Compare that to Hawaii that has an annual tax of .27%, yet the average annual tax on that beach-front property goes to an average of $1,529. From there, it all goes up. California’s tax rate is around .77%, and the average annual tax reaches $3,141. Maryland seems to take the cake with 1.1% taxes, and their average annual amount is $3,257. When you are decided what to do with your inheritance, keep numbers like this in mind.
This information may be covered in Probate, a legal proceeding after someone has died. With lawyers present, the court will check that the will and testament is valid, property is identified and appraised, and taxes are paid.
Tenants
If you are inheriting an established rental home, there is a good chance that you have to deal with tenants who have made their home on your newfound property. Maybe your loved one talked about them before, maybe you know the gist of who they are, or maybe you have absolutely no idea.
If it is true that you have never been a landlord before and you have no clue what to do, here’s a phrase you should get used to reading: ask a lawyer for more advice. They may know the local areas laws on reading up on your tenants. Do you have legal right to your loved ones notes on why they chose these tenants? Did they keep the background checks and are you allowed to see them or other identifying information? Is the lease signed using the departed’s personal name, or a business such as a LLC, and when does this paperwork need to be updated for new ownership?
You will want to introduce yourself sooner rather than later. These tenants probably know about the death of their landlord and are rightly very worried that you will end their tenancy. This is their home: it is best to meet them and tell them your plans, whether to sell as a personal home, sell with tenants so that they just get a new landlord that isn’t you, or keep and act as property manager (or hire a property manager).
Property Managers
Speaking of hiring a property managers, it may be something to consider. If you have inherited a property, for reasons both sentimental and practical, you may be thinking of keeping it. If you have no experience as a property manager then it may be smart to think about hiring one to do the complicated leg work for you. Becoming a property manager takes a bit of work, and you want to make sure you hire the right one if that is the right choice for you.
In the end, it is your decision what you do with your inheritance. During such a loss, you should take your time and make sure whatever action you take is right for you.
Subscribe to keep informed!
