When Selling Your Inherited House, There’s More Than Just the Sale Price

Mo Chopdat

If you’ve suddenly inherited a house, you may not be prepared for the questions and issues that can arise. And if you make the wrong decisions, you will likely encounter financial, emotional, and family problems before long.

So here’s some of what can go wrong when you inherit a house in South Africa.

What Can Go Wrong When You Inherit a House in South Africa

You May Owe More Taxes than Anticipated

Most people don’t have to worry about estate tax because of the very high exemption (in the millions). So in considering what can go wrong when you inherit a house in South Africa and when you intend to sell it, you need to consider the capital gains situation. You don’t have to pay tax on what you inherit because it’s not included in your gross income. However, the estate of a deceased person is subject to a 20% tax called estate duty. This means that tax is paid on the estate before it goes to the beneficiary or beneficiaries.     

The Mortgage May Be Bigger than You Thought

Generally in the past, when an elderly parent or relative passed, the mortgage on their house was paid off. These days, though, it’s common for people to refinance their home to supplement insufficient retirement funds. So if you intend to rent the house, you may have to Finance it in your own name.

The House May Need Repairs and Upgrades

With respect to what can go wrong when you inherit a house in South Africa, this one may be the most costly. Most of the time, people inherit a house from a deceased elderly parent or very close relative. Besides not having the physical ability to perform maintenance and upgrades, many elderly people don’t have the money for it either.  If you plan to live in the inherited house, this may not be a huge concern. But if you intend to rent it or sell it, you’ll have to make repairs to make it presentable and upgrades to bring it up to code and meet other legal and insurance requirements. Installing a new roof or re-wiring the house will involve a big chunk of money.

You May Have Problems with Relatives and Joint Heirs

But what if you’re not the only heir? That can be a problem. Suppose you and your siblings inherited the house jointly. If you want to sell it, your brother may want to rent it, and your other brother, to live in it himself. You can see what a powder keg waiting for a spark this is. In most states, joint heirs of a home are considered tenants in common, and one heir can force a sale if it comes to that. The process, however, is expensive, and the emotional and familial consequences are likely to be highly unpleasant.

So what can go wrong when you inherit a house in South Africa? Quite a lot, actually, if you’re not up to speed on tax laws, mortgages, and upgrade issues.  It is best to contact a qualified professional to help head off these issue quickly.  

Disclaimer: This is by no means legal advice on inherited property. A certified legal professional should be consulted when dealing with inherited property.