Chris Prefontaine walks through what to do with inherited property: sell fast for cash, or finance it yourself and collect payments over time. Inherited property gets a stepped-up tax basis, so capital gains are minimal. Seller financing typically nets more money than a conventional sale.
Chapters
Now you have this annuity-type income that you can use for whatever you want. You can put it into other assets. You can do whatever you want with it versus taking that right now. I got a couple questions recently from not only students but also some sellers. So I'm actually shouting out here to you as a real estate investor and/or you if you find this and you're in the situation where You are part of an inheritance and/or the only person inheriting property. So what if you inherit property? And if you're an investor, again, this is going to help you answer the question or help families navigate. So real simple, this will be short. If there are other heirs involved, the simple first question I ask is, do they want closure and less cash perhaps, especially given the market conditions, or— Would they like to max out the cash over time and take payments? It's that simple. So we either do terms or they're going conventionally and probably taking less and dealing with home inspections and haggling on price and all that stuff. Okay, so that's number one. As part of that decision, usually it does matter greatly if it's not free and clear. Because if it's not free and clear, there's some debt there that has to be paid. And if they can do that, or if you're the ear, if you can do that with an investor, They can take it over almost immediately versus having it on the open market, not only taking less down the road, but having those payments maybe slip behind, or you're paying them and it's coming out of your pocket. So that that factors into the situation a little bit. Secondly, if it's just one individual, I would strongly suggest strongly suggest you set up an annuity type income for yourself over time, and you can customize the terms. So for example. If the home's free and clear, or if it does, it does have a mortgage, but it's little and there's still some equity there. Take that equity over time, bump the price up so it's a premium. And so now you have this annuity-type income that you can use for whatever you want. You can put it into other assets. You can do whatever you want with it. Again, versus taking that right now. You can take it monthly. You can take it yearly. You can take it quarterly. You likely have I'm not an accountant, a CPA, or an attorney, so don't take this as advice, but you likely have a stepped-up basis, so to speak, from when you inherited the property. So there's minimum tax due anyway. There's just going to be a small gain on the spread. And if you take that small gain and spread it out over terms, I think that's a better situation. But again, are you by yourself making that decision, or if you have heirs? Either way, we would want to get with you personally and work that out. I will tell you plain and simple, you will net more over time selling on terms. That's it. That's it. So if you inherited a property, definitely get in touch with us. We'll put you in touch with one of our associates around North America and they can help you or we can help you personally. You can send an email to chris@smartrealestatecoach.com. Make it a great week. Look forward to seeing you on next week's Q&A Thursday.
