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1. Inheriting a home with a mortgage plus enough cash to pay off the mortgage.

2. Any compelling reason to NOT use the cash to pay off the mortgage?
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Yes. Do you have a financial plan?
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Yes,

Assume that we have an emergency fund, retirement savings are on track and all of our other ducks are in a row. :-)
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jfett:

1. Inheriting a home with a mortgage plus enough cash to pay off the mortgage.

2. Any compelling reason to NOT use the cash to pay off the mortgage?

Assume that we have an emergency fund, retirement savings are on track and all of our other ducks are in a row. :-)

Off the top of my head:

What is the interest rate?

How does the interest rate on the inherited home compare to every other interest rate you might be paying?

Will you keep the home or are you intending to liqidate shortly?

If you keep the home, will it be for personal use or will in be turned into a rental?

Regards, JAFO
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jfett:

1. Inheriting a home with a mortgage plus enough cash to pay off the mortgage.

2. Any compelling reason to NOT use the cash to pay off the mortgage?

Assume that we have an emergency fund, retirement savings are on track and all of our other ducks are in a row. :-)

Off the top of my head:

What is the interest rate?

3%, but I don't think that it is assumable. I don't know what interest rate we would end up with on a new mortgage.

How does the interest rate on the inherited home compare to every other interest rate you might be paying?

Don't have any other debts.

Will you keep the home or are you intending to liquidate shortly?

Hoping to sell it.

If you keep the home, will it be for personal use or will in be turned into a rental?

If we can't sell it short term, it would be a rental.


Regards, JAFO

P.S. I'm aware that we could theoretically make a bit of money by investing the borrowed money. But I don't think that the extra risk+hassle factor is worth it. Just wondering if there is something we haven't thought of here.
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Just wondering if there is something we haven't thought of here.

There are costs to a paid off house.

If you are planning to sell it, I might wait until the sale to pay it off because of the timing of clearing the deed, etc.

Also, I would get professional tax and legal help.
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Thanks in advance for any help!

Off hand, does anyone has knowledge about the following situation?

I have been living with my dad and taking care of him for the past two years. I handle all of his finances, manage his two four-plex rental apartments, cook, clean, take him to appointments (he no longer drives) and generally care for him. He is 89 years-old and is fairly good health but slowing down and dealing with "old age issues".

It is my dad's desire that I inherit the home upon his death. Because he has been in California so long his home is under the Prop. 13 law. That has limited the property tax to roughly 1% of the assessed value. Without that the property tax would be much higher and it will be assessed at current value when sold. The new owners will pay a higher tax.

Now, my question is this. If I inherit the home (it is currently in a revocable trust) can I keep the prop. 13 tax rate since I am his daughter? If not, if I get put on the title can I keep the current rate even when my dad passes away? Of course, the negative may be that when I sell the home (I have no plan to and will remain in it) I will have to pay a higher capital gains tax instead of the stepped up basis.

What say you?


Robyn
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What say you?

Find yourself an estate lawyer. DIY estate planning is often disastrous.
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My siblings went thru this on our parents family home in 2002 in the Bay Area. They still pay on the Prop 13 tax assessment. When the title changed, the county reassesed the house and upped the property taxes. At that time, they were told to pay the increased taxes and then file some additional paperwork with the county to certify they were son and daughter of the original owners. After the county reviewed the additional paperwork, the value was returned to the original assessment and the additional taxes paid during the interim was refunded. IIRC, one of the later Propositions that modified the original Prop 13 included this change.
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My siblings went thru this on our parents family home in 2002 in the Bay Area. They still pay on the Prop 13 tax assessment. When the title changed, the county reassesed the house and upped the property taxes. At that time, they were told to pay the increased taxes and then file some additional paperwork with the county to certify they were son and daughter of the original owners. After the county reviewed the additional paperwork, the value was returned to the original assessment and the additional taxes paid during the interim was refunded. IIRC, one of the later Propositions that modified the original Prop 13 included this change.

This might be Propositions 60 and/or 90.

Bob
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