Inheriting real estate from your parents can be both a blessing and a burden. Figuring out what to do with the property can be overwhelming, so it is good to carefully think through all of your choices.

There are three main options when you inherit real estate: move in, sell, or rent. Which one you choose will depend on your current living situation, whether or not you have siblings, the state of your finances, whether the house has a mortgage or liens, and the physical condition of the house. The following are some things to consider:

• Taxes. In most situations, you do not have to pay taxes on property you inherit, but if you sell the property you will be subject to capital gains tax. The good news is that inherited property receives a step-up in basis. This means that if you inherit a house that was purchased years ago for $150,000 and it is now worth $350,000, you will receive a step-up from the original cost basis from $150,000 to $350,000. If you sell the property right away, you should not owe any capital gains taxes. If you hold on to the property and sell it for $400,000 in a few years, you will owe capital gains on $50,000 (the difference between the sale value and the stepped-up basis). On the other hand, if you use the property as your primary residence for at least two years and then sell the property, you may be able to exclude up to $250,000 ($500,000 for a couple) of capital gains from your taxes.
• Mortgage. Does the house have a mortgage on it — either a regular mortgage or a reverse mortgage? Sometimes it is specified in the estate plan that the estate will pay off the mortgage. If that isn’t the case, with a regular mortgage you will likely have to assume the monthly payments. But with a reverse mortgage, you usually have a limited time to pay off the mortgage in full.
• Repairs. It is a good idea to hire a home inspector to assess the condition of the house. If the property needs significant repairs, it may affect what you do with it. Renovations and repairs can be costly and time-consuming.
• Property maintenance. Once you inherit property, you will be responsible for maintaining it. The first thing you want to do is to make sure the utilities and homeowners’ insurance are transferred to the new owners and continue to be paid on time. You will also need to pay all the property taxes and any other fees associated with the property.
• Other owners. If you inherit property with siblings, you will all need to agree on what to do. If one sibling wants the property, he or she can buy it from the other siblings. Otherwise, you can sell or rent the property and split the proceeds. If there is a dispute among siblings, you can try professional mediation. In mediation, the parties engage the services of a neutral third party to help them hammer out an agreement that all concerned can live with. If you go to court, the judge will likely order the house to be sold so the profits can be split.