Inheriting a house: What to do with the estate?
Losing a loved one is never easy, and estate management can be stressful and even anguish. One of the largest inheritance assets is often the property of the deceased. This property generates its share of questions, especially if all the heirs already have a place of residence. What to do with the house left as an inheritance? Is it taxable? Can I sell it? Can I refuse it?
SUMMARY
The first steps
Mortgage of the bequeathed property
History and condition of the bequeathed house
Taxation on the property you inherited
The right to refuse inheritance
Sell the house you inherited
The first steps
From the start of the process for managing the estate, make sure you get on well with all the heirs. All decisions must be taken by consensus. The refusal of a single heir to sell, for example, is enough to prevent the sale of the property. So developing a spirit of collaboration will make the process easier no matter what you decide to do with the property.
Moreover, it is wise to involve a notary very early in the process in order to support you and take charge of the process. He will be able to advise you in the decision-making process.
Mortgage on the bequeathed property
Your notary will take care of the statement of transmission of the property, that is to say the written act of transfer of the property. He will make sure there is no mortgage left on the property. Your notary will also transfer the title to you and verify the certificate of location, which will be essential, among other things if you decide to sell the property.
History and condition of the bequeathed house
Before making a decision on what will happen to the inherited house, it is important to have some knowledge of its history and condition. Whether the house is a hundred years old or recent, it can come with unpleasant surprises that could lead to laborious and expensive work.
Visit of the property
Go visit the property and see with your own eyes what visible condition it is in. You will not be able to see all the imperfections, but you will have a good idea of where you stand in relation to the property bequeathed.
House information
Get your hands on all the information you can find on the house: year the roof was redone, date of last work, problems already known, etc.
Other important information is the costs and expenses related to the property such as property taxes, insurance or maintenance.
Building inspection
The purpose of an inspection is to assess the condition of the interior and exterior of the property. Carrying out an inspection will give you an accurate picture of defaults and potential work.
Taxation on the property you inherited
In general, the main residence is tax-free while second homes, income or commercial properties are subject to tax.
The capital gain is the difference between the original purchase cost and the market value at the time of death (Deemed disposition).
For more information, ask your financial advisor or your financial institution.
The right to refuse inheritance
You have the right to refuse the succession. For example, if you discover that the bequeathed property is a money pit and that, in short, all of the deceased's assets turn out to be insufficient to pay all the debts (in other words an insolvent estate), you have the right to refuse. This is not a decision to be taken lightly so do your research.
Sell the house inherited
The key element in the sale of an inherited house is the consensus between the joint heirs. Indeed, all the signatories must agree in order to proceed with the sale.
If the goal of the heirs is to sell quickly, the sale of the estate will most often be without legal warranty of quality. This option makes it possible to simplify the sale of the property when you do not know the condition of the property.
Preparing a bequeathed property for sale
Even if it is not your property, it is important to prepare it so that it is attractive to future buyers. No matter how much time or money you decide to spend, remember to keep the area clean: mow the lawn, remove snow from the driveway and patio, clean the kitchen and bathrooms, etc.
Work and repairs to be carried out
If the property needs work and repairs, you have the option of having them done before it goes on sale. If you don't want to spend the time and money, you can lower the price of the property. What can also reassure buyers is to give them a list (and quotes) of the work to be done to give them an idea of what to expect.
Valuing space to help buyers project themselves
When selling a furnished property, be sure to clean, declutter, and depersonalize the rooms to allow visitors to imagine themselves living there.
If the property for sale is empty, it can be more difficult for buyers to plan. You have several tips that can help them visualize the potential of the house:
- Keep the premises clean
- Refresh the walls
- Suggest a plan
- Offer a virtual tour
- Rent furniture
Ask for the help of a broker to accompany you
A real estate broker can guide you through the process of selling your property to ensure a smooth process for you and your family.
SOURCES
JLR - Statement of transmission
Éducaloi - Hériter d’une succession insolvable : quelles conséquences? (French)
Journal de Montréal - Les précautions lorsqu'on hérite d'une maison (French)
