There are a number of circumstances that may lead to you inheriting your parents’ home. For instance, your parents could be downsizing to a condo and want to pass the home onto you rather than selling it, perhaps they are transitioning to a long-term care facility, or maybe one or both of them have passed away.
Either way, the process can be a little complicated. However, it’s important to know that as a beneficiary you have options. In this blog post, we’ll explore what some of those options are, and what you need to consider when following your preferred path of action.
Note: This article is intended to provide high-level guidance on a complex subject. For personal advice, speak to our team directly. Click here to send us an email or call 416-587-3300 to be in touch.
Selling Your Parents’ Home
One of the most common outcomes of inheriting a parent’s home is selling it. This is especially the case when there are multiple beneficiaries. If you are inheriting a home alongside other siblings, selling the property and dividing the profits could be the most straightforward outcome. That said, whether you’re the sole beneficiary or not, there are a number of important considerations to mull over before you list the home.
What to Know Before You Sell
As you might expect, there’s a lot of legal red tape involved in selling your parents’ home – even after you’ve inherited it. Many people assume that simply because they’ve been left a home in their parents’ will(s) or have a handshake agreement with their parents they can simply call a real estate agent and have the house on the market in a few days time. In reality, it’s a little more complicated.
Before you can sell your parents’ home, you need legal authorization. This could look like becoming the executor of the estate – i.e. following the probate process or seeking Power of Attorney (POA). Both of these steps can involve various delays and setbacks so it’s important to be on the ball before you start the selling process. In Toronto, probate may take as long as 6 to 9 months depending on the specific details of the estate. So, it’s best to get a head start on probate as soon as you can if you’re in this position.
For more insights watch our interview with Probate-specialist and Real Estate Lawyer David Kelman.
Capital Gains Basics
One very important thing to know about selling your parents’ home (when you’ve inherited it) is that you will be subject to taxation. While there’s no formal inheritance tax in Canada, you will have to pay capital gains tax once you choose to sell it.
Capital gains tax applies to 50% of the increased value of the home between the time you inherit it and the time you sell it. So, the longer you wait to sell, the more the home will appreciate in value and the more you’ll be taxed.
Are you actively helping your parents on their downsizing journey? Check out these other blogs for more tips!
- How to Purge The Family Home
- Is There Such Thing as a Stress-Free Downsize?
- Uncovering Hidden Wealth in Your Home
Keeping It
If you don’t want to sell your parents’ home, you could also keep it. This may seem like a more simplistic process than proceeding with a home sale, but there are still a number of critical considerations.
Why Keep Your Parents’ Home?
Now, you may ask yourself “Why should I keep my parents’ home?” After all, if you already have a home of your own, it may not make sense to have a second property on your hands.
Well, if your parents’ home is located in Toronto – or any other growing market in Ontario (or Canada), the income potential is likely very strong. Right now, the demand for rental housing in Ontario is growing exponentially, and landlords are enjoying healthy returns on their investments. With that in mind, keeping your parent’s home and converting it into an income-generating rental property can pay dividends almost immediately.
Of course, keeping your parents’ home also gives you the option to move in yourself – if you’re interested in that particular path. On that note, if you’re currently a homeowner, you can proceed with selling your existing home or renting it out in order to generate wealth for yourself and your family.
Helping your parents find the right home for their next chapter? Check out these blog posts for unique insights.
- Not Ready For Condo Life? 3 Alternatives For Downsizers
- Downsizing as a Snowbird
- Why You Should Downsize Downtown
Figuring Out the Right Path For You? We Can Help
Choosing what to do after inheriting your parents’ home isn’t always an easy decision. If you’re not sure which pathway will be right for you, we can help.
As experienced real estate agents who directly specialize in downsizing and estate sales, we have a unique degree of expertise in these types of circumstances. After getting to know you and your goals, we can make helpful recommendations on which option suits you best. Next, we’ll guide you through a smooth real estate process – whatever that may look like based on your ideal outcome.
Inheriting your parents’ home and unsure what to do? We can help! Click here to send us an email or call 416-587-3300 to be in touch.
