Inheriting real estate is rarely as wonderful as it may appear in movies. The responsibilities that come along with this gift can be
extremely overwhelming, especially if it is an older property in a state of disrepair. While your loved one or close friend may have had the best of intentions, often the property is an emotional and financial burden and is unwanted. If you have inherited
property, here is some important information you need to know about inheriting real estate in New Jersey.
One thing you should know about inheriting real estate in New Jersey is that the recipient of an inheritance of real estate is financially
responsible for the property. This includes any outstanding debts attached to the property, including liens. Additionally, you are now responsible for all upkeep. If the property is an investment for rental income, you may now also be taking on the duties
of being a landlord, which brings along more responsibilities and demands on your time. You will also owe property taxes and possible homeowner’s or property owner’s association fees. Often these associations have strict guidelines that must be adhered to
regarding the maintenance and appearance of the property.
The frequency and expense of repairs begin to increase at a quicker pace as homes age. This in turn increases the risks and expenses
involved with inheriting real estate in New Jersey that is not new or in pristine condition. Whether your intent is to live in the property or list the property, you should take steps to educate yourself on the condition of the home from the foundation to
the top of the roof. You will want to save yourself from catastrophe by investing in hiring a professional inspector to fully understand the task that lay ahead. It is highly recommended that you contact at least three professionals for each type of repair.
Keeping in mind the costs of holding a property continue despite the status of the repairs, be certain to get estimates of both the time frame and total overall cost involved.
Clearing Personal Property
Inheriting real estate in New Jersey can be a very emotional time and may even make it difficult or impossible for some to even enter
the property. Regrettably, you will need to either remove all of the personal property of the deceased from the property yourself or hire professionals. Depending on the condition of the property, and the tendencies of your benefactor, this could literally
mean going through mountains, clutter and decades with of belongings. Delaying the process to avoid painful memories can be extremely costly, delaying repairs on the property lowers the value as it continues to deteriorate.
Whether or not you believe you believe you will personally ever inherit real estate, it is one of the most common items passed on and
the tax implications are something everyone should have at least general knowledge about inheriting
real estate in New Jersey. Under the Unified Gift and Estate Tax system, estate tax is based on the value of property transferred through inheritance,
which is calculated based on specific guidelines and includes possible deductions. While often no federal estate tax is owed as the beneficiary, this is not always the case. Every American currently is allowed to inherit up to 11.18 million. You will also
want to be certain to investigate gift tax as well. Additionally, there are several states which do have estate taxes, so familiarizing yourself with these laws may be helpful in the future.
Purchasing Other Property
Because you incur the financial responsibilities along with the property, if you were on target to purchase your dream home, everything
may have just changed dramatically. One of the major changes may just be in the eyes of your lender when inheriting real estate in New Jersey. Depending on the remainder of the mortgage and any other expenses that are now in your name, your debt-to-income
ratio may now mean you no longer meet the guidelines to qualify for a loan. Additionally, the outlay for repairs is likely to deplete whatever savings you have managed to gather in anticipation of your plans.
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