It can be difficult to know what to do with an inherited property. Whether you choose to keep it or sell it is often a complicated emotional and financial decision.
Jason Ralph, Broker of Record for Royal LePage Team Realty, gives some valuable advice about dealing with a property inheritance.
What to Do with Your Inherited Property
Jason advises anyone who has inherited a property to first speak with their financial advisor or accountant before they do anything.
“Inheriting a property usually happens at a time when you are grieving, which makes it important to work with a financial planner who you trust,” he says. “You have to know if you can afford to take on this property. Even if the property does not have a mortgage, there are a lot of things to consider like the property taxes and upkeep of a second home.”
Some additional considerations include whether or not you want to make this property your primary residence, rent it out, or sell it. A professional financial advisor can help you to figure out the pros and cons in a number of scenarios.
Tax Implications of Inherited Property
In Ontario, we do not have an inheritance tax which makes the tax implications a little less complicated. If the home was the primary residence of the person who gifted it to you in their will, then it may be exempt from capital gains tax. There could also be additional taxes owed, like property tax. Speaking with a professional is imperative.
“Realtors are here to help you, not only with advice but also to recommend professional financial planners and real estate lawyers that are experienced with inherited properties,” says Jason.
Buying an Inherited Property
If you are interested in purchasing an inherited property, most of the process should be relatively smooth, though it could potentially take a little additional time.
“Typically, an offer with inherited property and an estate has a probate clause just stating that the buyer and seller agree that the closing date could be extended if probate is delayed,” explains Jason. “If you are trying to line up the sale of your other home, there can be some small complications with regards to closing dates so that is definitely something to take into consideration. A good Realtor will know the probate conditions to protect both the buyer and the seller.”
Working with a Professional Realtor
If you decide to sell your inherited property, working with a professional Realtor can help make the process less stressful. They know what questions you should ask your financial advisor as well as your lawyer. Working with a Realtor that you trust gives you peace-of-mind during a time that can be emotionally difficult.