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When You Inherit Your Parents Home
Published June 21, 2016
Now that the Stark children are back in Winterfell, they will need to address issues abut the inheritance of their family home. The family home is one of the most valuable assets that people own and plan to pass down to their children. Inheriting your parents’ home brings up emotional and financial issues.
Selling the home converts it into liquid assets that can be divided evenly. You’ll want to look at recent comparable sales, and a set minimum price that all the siblings can agree on. After the sale, you’ll need to pay the real estate agent’s commission, any transfer taxes and closing costs, and any remaining mortgage balance. Capital gains taxes are generally only charged on any profit above the fair market value of the home.
If you or a sibling wants to move into the home, keep in mind that your property taxes may increase; you would have to qualify on your own for any senior citizen exemption. If the home becomes your principal residence, you can eventually qualify for an exclusion from capital gains taxes, even if you sell later at a profit.
Finally, you may decide to keep the home and rent it out. If you consider this route, be sure to do a cost-benefit analysis that includes not only the rent you will charge, but expenses like insurance and repairs. One advantage to renting out the home is that the house and its improvements are considered depreciable assets, earning you a tax deduction from the rental income.
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