Inheriting a House: A blessing or a curse?

Inheriting a house can be a blessing. OR a curse. The difference is in the PLANNING as there will be tough emotional and financial decisions to make when the time comes.

Hi, I’m John Gigliello, Certified Financial Planner with the Albany Financial Group and you’re listening to Invest in Knowledge, a podcast about all things financial. After a life-altering health issue at age 39, my calling in life became clear: To share my knowledge of personal finance with PEOPLE who are looking to make smart and responsible choices with their money. Only through education, action and accountability can YOU build the confidence and security YOU need to live a SATISFYING life.

Today I am going to talk about what it means to inherit a house and how that can affect your overall financial plan. The inspiration for this episode came from a recent Wall Street Journal article reporting that heirs are electing to rapidly sell their parents’ homes, rather than to hold on to them for living, sentimental or income purposes.

Leaving a home to children remains a common way to transfer wealth.

More than three-quarters of parents plan to leave a home to their children when they die. This is according to a 2023 Charles Schwab survey of more than 700 American investors between the ages of 27 and 95, as reported by the Journal. 

Some children may be reluctant to sell for sentimental reasons, but finances and the simplicity of unloading a property often win out. Nearly 70% of those who expect to inherit a home from their parents plan to sell it, the Journal reported in the June 1st article. 

Deciding what to do with a family property is often both an emotional and financial decision, but currently the finances are ruling -- the rising costs of renovations, property taxes and utilities are making it harder for adult children to hold on to the real estate. Higher home prices and mortgage rates have often also made it impractical for heirs to buy out their siblings.

The high home prices of the past few years have made the decision to sell even more attractive. If inheritors can sell a house in a hot real estate market for a high price, the proceeds from the home’s sale can help secure their finances and fund other goals such as retirement.

When you inherit a home, you have three basic choices:

1.      Move in

2.      Rent it

3.      Sell it