Whether from a deceased parent or family member, inheriting a property can be an emotional and sometimes complicated matter.
This is according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who says it might not always be an easy situation to deal with at first, but having the knowledge and understanding of how to go about it will make it a far easier process to handle.
He says that in terms of tax, there are no immediate implications when a property is inherited, as the tax implications would fall onto the deceased’s estate.
However, Goslett says it is important to remember that if the property is sold, the seller may be required to pay Capital Gains Tax.
“The property will appreciate in value over time, which will increase the value of the estate duty that needs to be paid.” He says when the property is transferred into the new owner’s name, the estate will pay the transfer costs and the transfer duty, if any.
Goslett provides a few steps for those who have inherited a property:
Read the title
It is vital to ensure that the title is in order and that ownership is in the name that it is intended so that it can be freely transferred without any issues.
Check that the property hasn’t been used for loan security
Goslett says that if the property was used as collateral against any loans, there might be creditors or financial institutions that have a claim against the property.
The new owner will need to make sure they do their research on this and settle any claims before they decide to sell, lease out or transfer the property’s title. If another party has a claim against the property, it can affect the value of the property.
Get the home inspected
Having the home professionally inspected will provide an idea as to what condition the property is in and what may need to be done to get it back into a good condition.
Sometimes properties that have been held in families for some time are in need of attention to enhance their value. Undertaking the necessary repairs will protect the value of the property along with your inheritance.
Consider refurbishing, if you decide to sell the property
According to Goslett, there are subtle changes that can be made to enhance the home’s value and appeal to buyers, such as a fresh coat of paint, landscaping the garden or some modernisation.
Make the home more modern
Updating the kitchen and bathrooms can completely change the look and feel of a home. In addition, changing fixtures such as doorknobs and drawer handles can also modernise the home.
Get the property valued
A reputable real estate professional with working knowledge of the area will be able to provide an accurate evaluation of the property based on its location, features and various other determining factors.
The agent will be able to perform a Comparative Market Analysis, which will take all elements into consideration, including what comparable properties in the area have recently sold for. This will assist in determining what the inheritance property is worth, what the home could potentially sell for and whether Capital Gains Taxes would be applicable.
Check the garage and storerooms
These areas of the home might hold interesting items that have been left behind and forgotten that are not detailed in the will. It is therefore worthwhile searching through these areas before the property is sold.
“If you are ever in doubt or in need of assistance, it is advisable to consult with an attorney or estate planner who can provide guidance as to the best way to handle the inheritance.”
While it is not always an easy situation, there are professionals who can help and point the new homeowner in the right direction, says Goslett.