We buy houses in Pennsylvania and provide residents with the ideal way to sell their homes fast by offering cash for houses in PA. If you’ve suddenly inherited a property, you may not be prepared for the questions and issues that can arise. And if you make the wrong decisions, you will likely encounter financial, emotional, and family problems before long.
Forewarned is forearmed, they say. So as seasoned homebuyers in Pennsylvania, we have put down some of what can go wrong when you inherit a house in Pennsylvania.
You May Owe More PA Taxes Than Anticipated
Most people don’t have to worry about estate tax because of the very high exemption (in the millions), and the estate tax was even temporarily suspended in 2010. But also mostly suspended in 2010 was the step-up provision. So in considering what can go wrong when you inherit a property in Pennsylvania and when you intend to sell it, you need to consider the stepped-up capital gains situation.
The step-up provides that you pay capital gains taxes only on the gains above the fair market value at the date of the decedent’s death. It has nothing to with the price the decedent paid for the home – unless the step-up falls in one of the years when it was changed. In that case, you may owe a lot more in taxes than you bargained for.
The Mortgage May Be Bigger Than You Thought In Pennsylvania
Generally in the past, when an elderly parent or relative passed, the mortgage on their house was paid off. These days, though, it’s common for elderly people to take out a reverse mortgage on their home to supplement insufficient retirement funds in Pennsylvania.
You need to be aware, then, that a reverse mortgage cannot be assumed by heirs. And in the case of a standard mortgage, you can assume the mortgage only if you live in the property yourself. So if you intend to rent the home, you may have to refinance it in your own name.
The Pennsylvania House May Need Repairs And Upgrades
With respect to what can go wrong when you inherit a property in Pennsylvania, this one may be the most costly. Most of the time, people inherit a home from a deceased elderly parent or a very close relative. Besides not having the physical ability to perform maintenance and upgrades, many elderly people don’t have the money for it either. And if they do, they may simply choose not to because they know they won’t be living in the house very many more years.
If you plan to live in inherited property, this may not be a huge concern. But if you intend to rent it or sell it, you’ll have to make repairs to make it presentable and upgrades to bring it up to code and meet other legal and insurance requirements. Installing a new HVAC system or re-wiring the home in Pennsylvania will involve a big chunk of money.
You May Have Problems With PA Relatives And Joint Heirs
But what if you’re not the only heir? That can be a problem. Suppose you and your siblings inherited the house jointly. If you want to sell an inherited property, your brother may want to rent it, and your other brother, to live in it himself. You can see what a powder keg waiting for a spark this is.
In most states, joint heirs of a home are considered tenants in common, and one heir can force a sale if it comes to that. The process, however, is expensive, and the emotional and familial consequences are likely to be highly unpleasant.
Sell My House In Pennsylvania
So what can go wrong when you inherit a property in PA? Quite a lot, actually, if you’re not up to speed on tax laws, mortgages, and upgrade issues. It is best to contact qualified professional Pennsylvania home buyers to help head off these issues quickly. Or, you can sell your house in Pittsburgh directly to Dustin Buys Houses to get stress-free from the inherited property in Pennsylvania.