Insights: Series 1

3 Options When You Inherit a House

How to determine what’s your best course of action after you inherit a family home or cottage in Northern Michigan.

When you inherit a family home or cottage in northern Michigan, it can be an overwhelming, emotional, and even exciting moment in your life.

Your inherited property can present some opportunities for you, but it also can present some complications that you weren’t quite expecting.

Details such as its tax implications, whether their are liens or mortgages, and the current state of its true physical condition, will all be very important no matter what you choose to do with it. And your situation can be even more complicated if there were multiple beneficiaries to the estate, such asĀ siblings who could have an equal share and say in all matters.

As the new owner, it should be a priority to know as much as possible about your property before making any decisions.

Consider Your Choices

While there are many more details to know about estates that include real property, below we will cover the most common choices you have once you’ve inherited it.

Just remember, inheriting a house basically puts you in almost the exact same situation as if you had purchased it yourself. You are the new owner and all the benefits, and responsibilities, are now yours.

When it comes to deciding what to do with a home, condo or cottage that you’ve inherited, there are three basic choices:

Option 1: Sell the House

In a lot of situations, selling an inherited property in northern Michigan can often be the best choice. This can be especially true if you live or work in another area, or do not have an emotional attachment to the property.

The financial benefits of selling the property can be substantial as well, especially if the property was held in a trust. In such a case, you would realize the stepped up cost basis at the time the property was distributed to you. This enables you to sell it at fair market value with major tax savings.

If you do choose to sell the property, you still will need to consider the time and cost of preparing the property for sale, including clearing it of all personal items and making necessary repairs.

You’ll also want to work with a local real estate professional to market, show and sell the property. It’s usually a good idea to choose an agent who is close to the property, and who has the communication skills and energy necessary to make matters easier for you.

Option 2: Keep the House for Yourself

Sometimes the easiest and most desirable option is to keep the real estate that you’ve inherited for your own personal use.

Whether your inherited property is a house, condo or cottage, you can choose to live in it, keep it as a second home, share with family, or use as a vacation getaway.

And if you’ve inherited acreage, you can use the property for hunting, fishing, and other outdoors sporting and recreation dependent upon the land’s features.

When it’s affordable, keeping an inherited property is quite common throughout Harbor Springs and the rest of northern Michigan.

Option 3: Rent or Lease the House

Another potentially profitable option is to rent or lease your inherited property. Whether it’s a house, condo or cottage, you might find that your property could return some nice revenue for you. This is especially the case if it’s located in a desirable area or situated on a lake.

But if you live outside of the area or are new to being a landlord, the process of managing a rental could be challenging. And you’ll have to make sure that you’re not going to be in violation of local ordinances or the rules of any association. In these cases, finding a competent and reliable property management company might be a wise choice, and this comes at additional costs.

In either case, when you choose to keep an inherited property, it’s important to consider the costs of maintenance and repairs. Especially with older structures, which are very common in our areas, there could be a lot of deferred maintenance.

You may also be considering renovations and additions. In this case, it’s important to be very careful of local building codes that may increase costs or force you to make unanticipated changes and upgrades.

Consulting with a few local builders and contractors can always be a good idea to give you a better idea of what might be required.

Also, remember that depending on how long your family had owned the property previously, the taxes may increase quite a lot once you become the new owner.

Decide What’s Best for You

Each of these options has its own advantages and disadvantages. But by understanding the basics of real estate inheritance and knowing what to anticipate, you’ll be better prepared for what’s to come.

You’ll also be able to make the right choices for your own personal situation.

Remember, as the new owner of the inherited property, it’ll be up to you to make the choice to keep the property or to sell it. Be sure to consult with trusted professionals to get the advice you need to make the best decisions.

All content on this website is for information purposes only. Any information contained herein is not intended to provide legal or financial advice, nor does it create an agency relationship. All information is made available without any guarantee, warranty, or representation of any kind. It is your sole responsibility to seek the services of your own legal, financial, accounting, and real estate professionals prior to any such related decisions or transactions.

© Harbor Prime, All rights reserved. This information may not be copied, used, or distributed without Harbor Prime's consent.

Buying or Selling Up North?
Sell with a Local Pro
Put Together the Perfect Offer
agent profile icon
I'll Find It For You!