Inheriting a house from a loved one can seem like a blessing in some situations, but it’s important to be aware of the potential hidden costs that come with it, especially if the house in California is very old and unmaintained. It is very likely that you have some mixed emotions about the whole thing. You may be dealing with grief, unplanned funeral costs, unhelpful family members, and all sorts of things that nobody can really prepare you for. When taking on an inherited property in Los Angeles, knowing what it will cost you in money, time, and stress is important. Here is a look at some of the costs you may face when inheriting a property in Los Angeles so you can make the best decision throughout the process.
Tax Obligations on Inherited Property
Once the house is in your name, the property taxes will become your responsibility. When you inherit a house, you also inherit the property tax bill. Depending on where the house is located, property taxes can be quite high. Taxes vary dramatically by location, but can make a big difference in the holding costs you’re paying on the home. Property taxes will be very high given the price of many homes in California are over $1 million. For example, if the property is worth $1M (which if often the case in California), you incur an annual expense of $12,500 or over $1,000 monthly. Consider how you would cover this property expense.
In addition to property taxes, you may also be on the hook for estate taxes if the estate lacks the money to cover the bill. There can also be capital gains taxes in certain situations and a state inheritance tax depending on where your property is located. No matter how you look at it, you’re bound to pay a good amount in taxes as the new owner of the property. Make sure you budget for these taxes so you’re not caught off guard.
What are my options if I don’t have the available cash on hand to cover inheritance tax and increased property taxes? Talk to a mortgage lender to refinance the mortgage to cash out some equity and pay the taxes. Or sell the inherited house if you don’t have cash to pay the property taxes annually.
Utility Bills on Inherited Property
Whether or not someone is actively living in the inherited home, you’ll want to pay to keep the lights on. The property will need water and power, lawncare and landscaping, and pest control which can add quickly to the monthy costs you experience as the owner of the property. Not keeping the utilities on in order to maintain the inherited property could cause a visible decline in its condition fairly quickly.
In addition, you’ll want to keep the lights on daily for security purposes. It is important to keep an appearance that somebody is actually living there. Due to the rise in break ins Los Angeles, burglars will be able to spot when a house is empty for prolonged periods and enter without permission.
Finally, you’ll need pay for annual property insurance. In the event of a fire, earthquake, flood, break-in, or accidental injury that occurs on the property, an insurance policy will cover some (not all) of the surprise expenses associated with such disasters. Without an insurance policy, any of the above situations occurring would cost you thousands of dollars of unplanned expenses.
It is for the reasons above that many people who inherit a house in Los Angeles that is out-of-state, search for the fastest way to sell their house. On top of paying the property taxes and inheritance taxes in California, paying the bills on an empty house out-of-state simply doesn’t make sense. When there are no active plans for the Los Angeles property, sometimes a fast sale is best.
Maintenance and Repair Costs
Houses require ongoing maintenance and repairs, especially if they are older homes. Does the inherited house have a lawn, pool, or fruit trees? On the extreme end, do you see an overgrown lawn, a green-colored swimming pool, or over ripe fruit smashed below a fruit tree? These general maintenance items need should be completed and regularly maintained to avoid attracting rodents and harvesting of mosquitoes, which eventually make you a nuisance to your neighbords. Because aspects like the above need to be maintained regularly, so make sure to plan for monthly costs.
In addition to general maintenance, consider catch-up repairs on an inherited house that need to be completed quickly. Does the inherited house have peeling exterior paint, visible wood rot, leaky plumbing, old wiring, inoperable vehicles, and generally lots of trash and clutter? If so, make sure to resolve them immediately before you receive a code enforcement violation or your property insurance company makes it a bigger, stressful situation for you. Any one of these issues could cost thousands of dollars to address.
There are also repairs, clean-up, and the sorting of belongings to consider too. Whether you do the work yourself or hire someone to do the job, you will be dedicating time and money to the general maintenance of the inherited home in the expensive City of Los Angeles. If the house you inherited hasn’t been well-maintained, you may be faced with costly repairs to bring it up to code. Even if the house is in good condition, you’ll still need to budget for ongoing maintenance costs, such as lawn care, snow removal, and cleaning.
Mediation Expenses
Sadly, when a loved one passes away, disputes between family members can arise. If you have siblings or others with a claim to the estate, you may find yourself dealing with mediation fees. A quick way to resolve this is a buyout or a fast sale, dividing the profits. Fair Sale Homes can facilitate a fast and fair sale of your property, closing in a matter of days. This solution has saved countless families from having to deal with mediation or court.
While these are just a few of the costs to own a home, there are more to consider. You will need to pay for appraisals, cleaning, listing fees, and more. By selling the house quickly and as-is, you can save money, while liquidating the property much faster.
Sell Your House to Avoid Costs
If you decide to sell the inherited house in Los Angeles, you’ll need to factor in selling costs, such as real estate agent fees, closing costs, and any repairs or upgrades needed to make the house marketable. These costs can add up quickly, so make sure you have a realistic understanding of what you’ll need to spend to sell the house. That said, a direct sale to Fair Sale Homes will eliminate selling expenses altogether.
How Fair Sale Homes Can Help
Do you have questions about inheriting a property in Los Angeles? Fair Sale Homes can help you find the answers you need. We understand that it may be a difficult time, and we are very compassionate and understanding. We will never talk you into a deal that isn’t right for you – we will simply give you the facts and leave the rest up to you!
Inheriting a property in Los Angeles can come with costs you may not be prepared for. Fair Sale Homes can help you with any unwanted inherited property in the Los Angeles area, making the process simple for you. A direct sale to Fair Sale Homes will allow you to sell quickly, without any costs or headaches so that you can utilize your inheritance without any more stress. Give us a call today to learn more about how we can help with your inherited property in Los Angeles. (626) 863-7006
WE BUY HOMES across cities Southern California. A sample of cities where we buy homes for cash: East Los Angeles, Lincoln Heights, Silver Lake, Atwater Village, Van Nuys, Northridge, Pacoima, Panorama City, Harbor City, and Wilmington. Also, we buy apartments in Los Angeles, CA. Whether you are experiencing home foreclosure, code violation, failed property sale, or simply have an unwanted property, we will work with you to find a solution.