Inheriting a House: A blessing or a curse?

06/21/23 • 9 min

The Retirement Fix: Less Stress, More Success

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

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.

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

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

1. Move in

2. Rent it

3. Sell it

Previous Episode

SECURE Act 2.0: How changes in retirement laws will affect you.

The Setting Every Community Up for Retirement Enhancement Act of 2019, popularly known as the SECURE Act, was signed into law in late 2019.

Now called SECURE Act 1.0, it included provisions that raised the requirement for mandatory distributions from retirement accounts and increased access to retirement accounts.

But it didn’t take long for Congress to enhance the landmark bill that was enacted barely three years ago.

Tucked inside a just-passed 4,155-page, $1.7 trillion spending bill are plenty of goodies, including another overhaul of the nation’s retirement laws.

Dubbed SECURE Act 2.0, the bill enjoys widespread bi-partisan support and builds on SECURE Act 1.0 by strengthening the financial safety net by encouraging Americans to save for retirement.
Here are 9 key takeaways.

Next Episode

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In today’s episode I am going to talk about why you should not try to time the markets.

First, it’s difficult to time the market. We’ve seen this play out several times in just the past few years. For example, few foresaw the strong market rebound that occurred as we came out of lockdown in 2020, or that inflation would become the ongoing problem that we’re still dealing with today. We saw it again this past spring – professional portfolio managers and investors alike were broadly pessimistic about the stock market, particularly in the wake of several bank failures. Yet, stocks have gone virtually straight up since.