- Repairs and renovations.
- Any debt that would pass to you with the home.
- Annual property taxes.
Now let's look at selling or renting.
Under IRS stepped-up cost basis rules, you may sell without paying tax on the gains that accrued since the deceased homeowner first bought the house. You'll pay capital gains tax only on any increase in the property's value between the time you inherited and the time you sold. These savings alone can be a great gift to you.
Inheritance taxes are not a major factor for most homes, and that factor is easily checked.
2. Working Out a Shared Inheritance Commonly Means Selling.
Are you one of several beneficiaries? Does everyone agree on what to do? One sibling may wish to sell. Another might want the house. These factors typically mean someone will sell their inherited interest.
3. You Could Have a Choice of Which House to Sell or Rent.
If you inherit a free and clear title, you can move into your inherited home, and enjoy it without debt, while selling your current home. Be sure to use the time when the home is in probate to speak with your real estate agent about preparing the home for sale.
Renting out the house for investment income is another option. Your real estate agent can check for any zoning restrictions and offer you further pointers.
Tip: If you rent out the home it won't be a primary residence, so it won't get the capital gains tax benefit when you ultimately sell the home. Yet certain rental property spending is tax-deductible, and rent-related income has a low tax rate.