I Inherited My Parent's Home, Now What?! Part 1

PART ONE: WHAT TO DO WHEN YOU INHERIT A HOME IN TORONTO CANADA: 10 TIPS YOU NEED TO KNOW

Inheriting a home from a loved one can be a mixed blessing. On one hand, you may feel grateful and honoured to receive such a valuable asset. On the other hand, you may feel overwhelmed and confused by the legal, financial, and emotional implications of inheriting a property.

If you are in this situation, you may be wondering what to do next. How do you deal with the inheritance tax, the probate process, the maintenance costs, and the potential conflicts with other heirs? How do you decide whether to keep, sell, or rent out the inherited property?

To help you navigate this complex and sensitive issue, we have compiled 10 tips that you need to know when you inherit a home in Ontario, Canada. These tips will help you understand your options, avoid common pitfalls, and make the best decision for your situation.

Tip 1: Seek professional advice

The first thing you should do when you inherit a home is to seek professional advice from a lawyer, an accountant, a realtor, and a financial planner. These experts can help you understand the legal, tax, and financial implications of inheriting a property, and guide you through the necessary steps and paperwork. They can also help you avoid costly mistakes and protect your interests.

Tip 2: Probate the property

Probate is the legal process of validating the will of the deceased person and distributing their assets according to their wishes. If the inherited property is part of the estate, you will need to probate it before you can take ownership of it. Probate can take several months or even years, depending on the complexity of the estate and the presence of any disputes or challenges. You will need a lawyer to help you with the probate process, and you may have to pay probate fees and taxes.

Tip 3: Understand the inheritance tax

Contrary to popular belief, there is no inheritance tax in Canada. However, there may be other taxes that apply to the inherited property, such as capital gains tax, income tax, and property tax. Capital gains tax is the tax you pay on the difference between the fair market value of the property at the time of death and the adjusted cost base of the property. Income tax is the tax you pay on any income generated by the property, such as rent or interest. Property tax is the tax you pay on the value of the property, which varies by municipality. You should consult an accountant to determine your tax liability and plan accordingly.

Tip 4: Decide what to do with the property

Once you have completed the probate process and settled the tax issues, you will need to decide what to do with the inherited property. You have three main options: keep it, sell it, or rent it out. Each option has its pros and cons, and you should weigh them carefully before making a decision.

• Keep it: If you decide to keep the property, you will have to pay for the ongoing costs of ownership, such as mortgage, insurance, maintenance, and utilities. You will also have to deal with any emotional attachment or sentimental value that the property may have for you or your family. However, keeping the property may also have some benefits, such as providing you with a place to live, a vacation home, or a family legacy.
• Sell it: If you decide to sell the property, you will have to pay for the costs of selling, such as commission, legal fees, and staging. You will also have to deal with the market conditions, the timing, and the potential buyers. However, selling the property may also have some benefits, such as providing you with a lump sum of cash, freeing you from the responsibilities of ownership, and allowing you to move on with your life.
• Rent it out: If you decide to rent out the property, you will have to pay for the costs of renting, such as repairs, advertising, and property management. You will also have to deal with the tenants, the rental income, and the landlord-tenant laws. However, renting out the property may also have some benefits, such as providing you with a steady source of income, increasing the value of the property, and diversifying your portfolio.

Tip 5: Communicate with other heirs

If you are not the only heir of the property, you will have to communicate with the other heirs and reach an agreement on what to do with the property. This can be a challenging and delicate task, especially if there are conflicting interests, expectations, or emotions involved. You should try to be respectful, transparent, and cooperative with the other heirs, and seek mediation or arbitration if necessary. You should also consult a lawyer to ensure that your rights and obligations are clear and fair.

I hope you found these first 4 tips helpful. Stay tuned for Part 2!