What to Do When You Inherit Your Parents’ House

Advice for selling it, moving in or renting it out  used 6-17-20

By Craig Venezia July 1, 2019

Boomers stand to inherit upwards of $27 trillion over the next four decades, according to The Center of Wealth and Philanthropy at Boston College, and a portion of that includes the house their parents lived in.

But when that house becomes yours, figuring out what to do with it can present financial and emotional issues. If your siblings are involved, things can get even trickier.

“There are three basic paths you can take,” says Bruno Graziano, a senior estate planning analyst with Wolters Kluwer, CCH. “Sell the house, move into it, or rent it out.”

Here’s advice for each scenario:

 Selling Your Parent’s House

A few years back, when Ken Levy, 70, and his brother inherited their mom’s condominium in Dallas, Texas, they pretty much knew they’d sell it.

Since the condo had appreciated in value during the nearly 10 years their mom owned it, the Levy brothers looked at recent comparable sales to price it right and to agree on a minimum amount they’d accept.

In spite of the appreciation, the Levys knew they’d most likely avoid owing capital gains taxes on the sale. “Beneficiaries receive a stepped-up basis, which is the property’s fair market value at the date of the parent’s death,” says Graziano. “When you sell, you only pay taxes on gains over that basis.”

Looking at comps and deciding on a minimum price, as the Levys did, are good ideas if you plan to sell your parent’s home. You’ll also want to make sure the homeowner’s insurance is paid up and the estate or trust is named as the insured, in case anything happens to the home between your parent’s death and the sale.

The same is true of mortgage payments (if any), property taxes and utility bills.

Once the property sells, you’ll need to pay any remaining mortgage balance along with any real estate commissions, transfer taxes and other closing costs.

Moving Into Your Parent’s House

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