What Can Go Wrong When You Inherit a House in PA | Inherited a Pennsylvania House

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Inherit a House in PA | Inherited a Pennsylvania House

If you suddenly inherit a house in PA, you may not be prepared for the questions and issues that can arise when you inherited a Pennsylvania house. And if you make the wrong decisions, you will likely encounter financial, emotional, and family problems.

Forewarned is forearmed, they say, so here’s some of what can go wrong when you inherit a house in PA.

What Can Go Wrong When You Inherit a House in PA

You May Owe More Taxes than Anticipated

Most people don’t have to worry about estate tax because of the very high exemption (in the millions), and the estate tax was even temporarily suspended in 2010. But also mostly suspended in 2010 was the step-up provision. So in considering what can possibly go wrong when you inherit a house in Pennsylvania and when you intend to sell my house fast, you need to consider the stepped-up capital gains situation.

The step-up provides that you pay capital gains taxes only on the gains above the fair market value at the date of the decedent’s death. It has nothing to with the price the decedent paid for the house – unless the step-up fell in one of the years when it was changed. In that case, you may owe more taxes than you bargained for.

The Mortgage May Be Bigger than You Thought

Generally, in the past, when an elderly parent or relative passed, the mortgage on their house was paid off. These days, it’s common for older adults to take out a reverse mortgage on their homes to supplement insufficient retirement funds.

You need to be aware that heirs cannot assume a reverse mortgage. And in the case of a standard mortgage, you can take the mortgage only if you live in the house yourself. So if you intend to rent the house, you may have to refinance it in your name.

The House May Need Repairs and Upgrades

This one may be the costliest concerning what can go wrong when you inherit a house in PA. Most of the time, people inherit a home from a deceased elderly parent or very close relative. Besides not having the physical ability to perform maintenance and upgrades, many older adults don’t have the money for it either. And if they do, they may choose not to because they know they won’t be living in the house for many more years.

This may not be a huge concern if you plan to live in an inherited house. But if you intend to rent or sell it, you’ll have to make repairs to make it presentable and upgrades to bring it up to code and meet other legal and insurance requirements. Installing a new HVAC system or re-wiring the house will involve a lot of money.

You May Have Problems with Relatives and Joint Heirs

But what if you’re not the only heir? That can be a problem. Suppose you and your siblings inherited the house jointly. If you want to sell it, your brother may want to rent it, and your other brother, to live in it himself. You can see what a powder keg waiting for a spark is.

In most states, joint heirs of a home are considered tenants in common, and one heir can force a sale if it comes to that. The process, however, is expensive, and the emotional and familial consequences are likely to be highly unpleasant.

So what can go wrong when you inherit a house in PA? Quite a lot if you’re not up to speed on tax laws, mortgages, and upgrade issues. Contacting a qualified professional to help head off this issue is best. {What Can Go Wrong When You Inherit a House in Pennsylvania | Inherited a Pennsylvania House}

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