Working out an inheritance can be tricky. And many people may not know how inheriting a property works, here we will help you to get an idea of what all goes on.
Being passed down an estate is a hard and stressful time. Upon a family member’s or friend's death, you would be appointed the executor of their estate and would manage their debts and assets according to their will. The part of the estate given to descendents is the inheritance, which may include a house or land property.
With any large financial transactions, you should be aware of the tax consequences. Fortunately, Canada is not one of those jurisdictions; there is no inheritance tax in Canada.If the home being inherited was the deceased’s primary residence, there’s no tax on the property transfer at all. If it was a secondary home, like a cottage, there is an estate tax. The estate tax is paid from the estate’s assets, so the inheritor doesn’t have to pay anything.
Staying along those lines, you may also inherit a property with a mortgage attached to it. As you settle debts of the deceased as the executor, this will include mortgages. Ideally the estate would have enough assets and investments to cover the mortgage. If not, then the house will need to be sold to pay off the mortgage, since not every lender will allow the inheritor to take over the mortgage payments.
So after you inherit a property, what are some of the things you need to do?
You will need to continue to maintain the home, either by yourself or hiring someone to be checking in on it.
You should also keep the home fully protected by contacting the home insurance provider and secure coverage as the new homeowner.
You may also want to do a home inspection, just to be sure there are no outstanding issues with the property. And along that note get a comparative market analysis done by a local real estate agent or appraiser to get a feel for what the property is worth in today’s market.
In the end there are only three things you can do with an inherited property; move in, sell or rent. What you decide to do with the property is up to and to the circumstance you find yourself in.