If you’ve inherited New Orleans property but find yourself behind on mortgage payments or unable to afford necessary repairs, you might consider selling it as is, for cash.
When you inherit a house from a relative or loved one, you can do one of these three things: sell it, live in it, or rent it out. This includes refinancing the house, or getting tenants interested in eventually buying the house (the rent to own scenario). Figuring out what to do can be daunting, but delaying your decision might not be wise.
There are circumstances when you or other beneficiaries cannot wait, and do not want — or cannot afford — to keep the property. Here are the signs you shouldn’t keep your inherited home and could benefit from selling it quickly, in as-is condition.
Property Taxes Are Too High or You Are Behind on Payments
You inherit the former owner’s debts along with the house. The good news is that an inherited house is treated as an asset, on a stepped-up tax basis. Capital gains are based on fair market value, not the original price at time of purchase. But capital gain rates could be as high as 20 percent for taxpayers with higher incomes. And unless you plan to live in the house you’ve inherited for at least two years you won’t quality for tax benefits, such as the home sale tax exclusion.
Plus, the previous owners could be behind on property tax payments, which become your financial obligation when you become the beneficiary. And if you decide to rent the property out as a means to generate regular income, whatever you’ll be making is subject to taxation. This could offset your current tax benefits and might not be worth it at all. You should carefully consider all tax implications before deciding what to do with your inherited property.
The Mortgage Is “Upside Down”
Mortgages must be paid off, so if the house comes with an “upside-down” mortgage (its market value is lower than its mortgage) it might be best to sell the house as soon as possible.
Expenses Are More Than Its Value
In addition to property taxes and mortgage payments, you might end up having to honor other financial obligations attached to the house, such as homeowner’s insurance, repairs, and maintenance. And if you decide to sell through a traditional realtor or go the FSBO route, you’ll still be responsible for all the bills, payments, and upkeep, such as lawn care, while the house is on the market.
You Cannot Afford the Necessary Repairs
You could spend thousands of dollars and months of man hours if the house you’ve inherited requires extensive renovations in order to become habitable, sellable, or rentable. What if you can’t afford the repairs? Or don’t want to cover the costs of inspection, termite treatments, or anything else the house might require before it becomes safe to live in? Regular maintenance will also be an expense that will keep mounting over time, especially in the wake of emergency repair work, like electric work or roof replacement.
The Hassle Is Not Worth Your Time
If you decide to keep your inherited property, you’ll need to register the house in your name, then keep up with the taxes, insurance, mortgage payments, and so on. This also means enlisting mortgage brokers, lawyers, financial advisors, home inspection services, etc., and paying all the required fees. What if you don’t have the time to take this on?
If you are not up for investing your money and your time into repairs, upgrades, maintenance, and all the fees required to rent the house out or sell it through a real estate agent, your best option might be to sell your inherited New Orleans property as is, as soon as possible. Big Easy Buyers buys homes in their as-is state for cash. Contact Big Easy Buyers to learn about our four-step process and the fast and easy solutions we offer to homeowners in the greater New Orleans area.