Inheriting a property often raises a crucial question: should the inherited property be rented out or sold? Let’s be clear from the outset: this decision is complex and depends on various factors.
Renting or selling? A guide
The first step is to carry out a thorough financial analysis of the initial situation. All running costs such as maintenance, taxes, insurance and any mortgage payments should be taken into account. The resulting financial affordability for the community of heirs forms a solid basis for the decision-making process. The tax aspects in particular are of great importance and vary considerably depending on the canton and the individual situation of the heirs. It is advisable to consult a tax advisor to understand the tax implications of both the rental and/or sale options.
The current market situation also plays an important role. If the property market is experiencing high demand and record high prices, a sale could be financially attractive. On the other hand, stable rental demand and a balanced rental market may speak in favour of letting.
The condition of the inherited property is another important aspect. Any renovations or necessary modernisations could make the option of selling advantageous. If the property is in good condition, renting it out could appear to be the more attractive option. Long-term plans should also be taken into consideration. If the intention is to use the property yourself in the future or to pass it on within the family, renting it out could be considered as a temporary solution.
Personal preferences and current lifestyle should also be taken into account. Renting requires a certain amount of support, while selling can lead to a quick goal and completion of the project.
Last but not least, it should be mentioned that inheriting a property often involves a high emotional component. In many cases, the inherited property is personally known to one or more heirs and certain memories are associated with it. Within a community of heirs, the personal connection to the property can also be so different that the heirs attach different emotional values to the property. Such a circumstance can lead to complications in the decision-making process, whether to sell or let, and should be addressed and discussed as early as possible in the process.
In many cases, professional advice is crucial. Ultimately, there is no universal answer and the best choice will depend on individual circumstances. Careful consideration of all relevant factors will help to make an informed decision that meets your needs and objectives.
Our team of experts will be happy to advise you on all aspects of inheriting a property, in collaboration with tax experts and property trustees.