Inheriting a home can present a lot of questions that you may not be prepared to answer: Should I live in the home? Is there a mortgage on the property? What taxes are due, and can I afford to pay the amount due? Many people simply end up selling the home and pocketing the proceeds.

Let’s take out the emotional cost or benefit of whether to move into the home of a close family member after their death. Some decision factors clearly go beyond monetary concerns.

If you have questions about a real estate inheritance, you can find a lot of helpful information on the Georgia Department of Revenue and Internal Revenue Service websites. In the meantime, here is some basic information to help you get started.

Find out if the home has a mortgage

Since many mortgages have a due-on-sale clause, the mortgage holder could demand that you pay off the outstanding balance on the loan, unless you happened to sign the promissory note. If you continue to make the payments on time though, the bank may not demand full payment of the loan. Talk to the mortgage holder for more details.

If you’re inheriting a home from an older individual, it is important to note that Census Bureau data shows that 30 percent, or 6.1 million, of the homeowners age 65 or older have some form of mortgage debt. Often, eligible homeowners will take out a reverse mortgage to help pay their living expenses during their retirement years. Reverse mortgage rules require repayment of the outstanding loan debt under certain conditions, which can include someone inheriting the home. Make sure you know all the terms of the loan if you decide to stay in the home.

State and property taxes

According to the Georgia Department of Revenue, you will not be required to pay a state inheritance tax to inherit a home in Atlanta, but depending on the conditions, you may be required to pay an estate tax. As soon as you inherit real estate, it would be prudent to check with the Georgia Department of Revenue to find out the status of the property taxes on the home.

The Legal Affairs & Tax Policy office will provide legal guidance on tax laws and answer all of your questions.

Federal inheritance and capital gains taxes

Depending on the net worth of the home you inherit, you may be required to pay a federal inheritance tax. If you decide to sell the property, you will have to report the transaction to the federal government if you have a capital gain or profit.

Duffy Realty strongly recommends that you seek the services of a qualified financial planner or tax attorney to find out what effect inheriting a home has on your finances and what your tax obligations are under local and federal law. If you have any questions about buying or selling real estate in the Atlanta metropolitan area, contact one of our agents for more information.

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