What to Do When You Inherit a House in Massachusetts
Inheriting a home can come at an emotional and complicated time. Along with dealing with the loss of a loved one, you may suddenly find yourself responsible for a property, mortgage payments, taxes, insurance, repairs, and belongings.
If you've inherited a house in Massachusetts, you generally have several options: keep the home, rent it, sell it traditionally, or sell it as-is.
Before deciding, it helps to understand what happens after you inherit a property and what steps you may need to take.
1. Determine Who Legally Owns the Property
The first question is whether ownership of the home has already transferred or whether the property needs to go through the Massachusetts probate process.
How the property was titled, whether there was a will or trust, and whether there were joint owners can all affect what happens next.
If the property is part of an estate, the personal representative may need authority from the Massachusetts Probate and Family Court before certain actions can be taken.
Because every estate is different, an estate or probate attorney can help determine exactly what is required before the home is sold.
2. Find Out What the House Is Worth
Even if you aren't ready to sell, it's helpful to determine the property's current market value.
You may want both:
A date-of-death appraisal — This can be important for tax purposes.
A current market valuation — This helps you understand approximately what the house could sell for today.
For federal tax purposes, the basis of inherited property is generally its fair market value on the date of the previous owner's death, although exceptions can apply. This is sometimes referred to as a "step-up in basis."
For example, suppose your parents purchased their Massachusetts home many years ago for $100,000. When you inherit it, the home is worth $450,000.
Your tax basis may generally be approximately $450,000 rather than the original $100,000 purchase price.
If you later sell it for $465,000, the potential taxable gain generally isn't calculated simply by subtracting $100,000 from $465,000. The property's inherited basis and other allowable adjustments would need to be considered.
Consult a CPA or tax professional about your particular situation.
3. Check the Mortgage, Liens and Other Expenses
Inheriting a house doesn't necessarily mean inheriting a house that's completely paid off.
Find out whether the property has:
- A mortgage or home equity loan
- Property taxes due
- Municipal liens
- Condo or HOA fees
- Utility balances
- Insurance expenses
- Necessary repairs or maintenance
These costs can become important if it takes several months to settle the estate or sell the property.
4. Understand Massachusetts Estate Taxes
Massachusetts has its own estate tax.
For people dying on or after January 1, 2023, Massachusetts generally requires an estate tax return when the gross estate plus adjusted taxable gifts exceeds the state's $2 million filing threshold.
This doesn't mean that someone who inherits a $500,000 house automatically owes Massachusetts estate tax. The tax applies to the estate and depends on the value and circumstances of the overall estate.
When required, Massachusetts estate tax returns and payments are generally due nine months after the person's death.
An estate attorney or CPA can determine whether an estate tax return is required.
5. Decide What to Do With the House
Once you understand the estate and the property's financial situation, you have a few choices.
Keep the House
You may want to move into the property or keep it in the family. Before doing so, consider the mortgage, taxes, insurance, repairs and ongoing maintenance.
Rent the House
Keeping the property as a rental could provide income, but you'll also become responsible for managing tenants, repairs, insurance and landlord responsibilities.
Sell the House Traditionally
If the property is in good condition and you have time to prepare it for the market, you can list it for sale.
This may involve cleaning out the property, making repairs, updating certain areas, preparing it for showings and waiting for a buyer to obtain financing.
Sell the House As-Is
Sometimes an inherited house needs substantial work—or the family simply doesn't want to spend months preparing it for sale.
In that situation, selling the house as-is for cash may be another option.
An as-is sale can potentially eliminate the need to make repairs, renovate the property or prepare it for traditional showings.
Don't Spend Thousands Fixing an Inherited House Before You Know Your Options
One of the biggest decisions heirs face is whether to put money into the property before selling it.
You may look around and think:
"We need to replace the kitchen."
"We need a new roof."
"We need to clean everything out."
"We need to spend $30,000 before anyone will buy this house."
That isn't necessarily the case.
Before spending thousands of dollars renovating an inherited property, find out what the house could be worth as-is.
You can then compare your options and decide whether investing money into repairs makes financial sense.
What If the House Is Full of Belongings?
This is extremely common with inherited homes.
A parent or relative may have lived in the house for 30, 40 or even 50 years. Going through decades of belongings can feel overwhelming.
Start with important personal items, financial records, photographs, jewelry, documents and anything family members want to keep.
Depending on how you choose to sell the property, you may not necessarily have to completely renovate or empty the house before selling it.
What If Several Siblings Inherit the House?
Things can become more complicated when multiple heirs inherit a property.
One sibling may want to keep the house.
Another may want to sell immediately.
Another may want to renovate it first.
Before spending money on the property, the family should understand who has legal authority to make decisions and discuss the available options.
An estate attorney can be especially helpful when multiple beneficiaries are involved.
Thinking About Selling an Inherited Massachusetts Home?
At HouZingo.com, we understand that selling an inherited property can be different from selling a typical home.
You may be dealing with probate, family members, years of belongings, deferred maintenance, or a property that needs significant repairs.
That's why we make it simple to explore an as-is cash offer for your property.
There may be:
No repairs.
No renovations.
No need to prepare the house for showings.
Before spending thousands fixing up an inherited property, find out what your options are.
Get Your Cash Offer
See what your inherited Massachusetts property could be worth as-is.
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This article is for general informational purposes and is not legal, tax, or financial advice. Probate, estate and tax situations vary. Consider consulting a Massachusetts estate attorney, CPA, or other qualified professional regarding your specific circumstances.