Inheriting valuable property like a home, sell your inherited property or retirement accounts can be a major financial windfall. However, inheriting assets also carries significant responsibilities that need to be addressed, including tax implications and how to handle disagreements among co-inheritors. A financial advisor can help with this process and ensure that you make wise decisions about what to do with your inheritance.

Inherited real estate, for example, may have to be sold in order to pay off the mortgage or property taxes. Additionally, inherited homes and other properties often require extensive repairs. A fixer-upper could be a great opportunity for investors who have the time, money and know-how to take on these projects and potentially turn a profit.

No-Hassle Home Selling: A Stress-Free Way to Sell Your Property

One of the most important aspects to consider is whether or not you will have to pay capital gains taxes on the sale of your inherited property. The answer depends on how much the decedent paid for the property and its current value. According to the IRS, the heir’s cost basis (the original price) is transferred with the property and becomes part of its final value at death. If the property sells for more than the original purchase price, a capital gain is triggered.

A date of death appraisal can help determine a property’s value at the time of the deceased’s passing, making it easier to calculate your tax liability. Heirs can also choose to live in the property for a few years before selling it, which allows them to take advantage of a capital gains tax exemption and avoid paying taxes on the difference between the original purchase price and the final sale price.