Inherited many rental properties. would sell or keep?

[truenorth418]

If you inherited the equivalent value in cash, would you immediately go out and purchase rental properties?

If not, then what would you do with the money?

Answer these questions and you will know whether to sell or keep your rental property inheritance.

 

[Bamaman]

Hi Bamaman,

Thank you for the comment. I have done a probate for my ex father in law. I did it by myself, so I know some about probate. I guess I am pretty top of things what you advised about management the properties.

However, I didn't get the comment about "some penalties for non-payment of liabilities of the estate"

Can you or anybody explain about that?

Thank you in advance.

What I was meaning is that estates are taxed differently than an individual--higher tax bracket. You would essentially need to have two sets of books for your sister's income--before death and after death. The estate would need to have a second tax ID number established by the IRS for after her death. Income tax returns would need to be done for your sister and a second tax return for the estate. Failure to file taxes might incur stiff penalties by the IRS. And unless you've been paying other estate liabilities like property taxes promptly, penalties may be assessed. And like I said earlier, property appraisals and information on her other assets and liabilities are required.

But the first task would be for you to get an attorney file with the probate court and have the judge establish you as the executor of the estate which authorizes you to pay bills and take care of day to day business. You may have birth certificates, etc. to prove you are related and are her sister.

The lack of a will indeed complicates matters, and probating her business may be time consuming for an attorney. Fortunately, state laws do cover such matters, but unfortunately state courts often want more than their fair share of the estate too.

Good luck on this one. You really need an attorney that you're comfortable with. This could be a complicated matter to get settled.

 

[Retired Expat]

Rental properties can be sold and reinvested under the IRS 1031 code. If too much of a hassle consider sale and reinvestment in better, newer, more maintenance free or just closer together properties (small apartment house or commercial). Do it after the estate settles and property is in your name.

RE is great but you might want to diversify a bit too....

 

[ILikeStarTrek]

If you inherited the equivalent value in cash, would you immediately go out and purchase rental properties?

The phrasing of this question is slanted in one direction. To "go out and purchase" rentals implies doing all the effort of researching, buying, rehabbing, and getting tenants for rentals. It's a significant amount of effort, and that effort alone might dissuade someone from buying rentals, especially eight of them back-to-back. In fact, I personally have about this many rentals of my own. I've had them for several years and I'm happy I have them. But if I didn't have my rentals and instead I had the equivalent in cash, at this point in my life I don't think I would want to do all the effort to go out and buy them from scratch. But given that I have them, I don't want to sell them either.

I think a more balanced way of asking what you are trying to ask is, if you were given the choice of having these houses given to you (with the tenants in place, etc) or having the cash given to you, which one would you rather have?

 

[retire to nature]

Thank you for everybody's replies,

I guess I was doing well on managing the properties. My concern was resolved with learning up the step up basis.

I am planning to keep all those houses and sell it when the tenants want to move out. Or I may be better later to keep going on.

My RN job was no stress but business was a bit stressful. Actually, I had to go to ER couple days ago because I had sister's tenant couldn't pay rent and moved out.

Maybe I am more stressful because I don't have the authority. Possibly, everything is on my name it should be better.

I am really glad and grateful that I know this site and could ask it here.

Thank you very much all of your helps!!