All Forum Posts by: Renee K.

@Greg Wilkins @Steve Babiak I am 100% sure that the responsibility for the inheritance tax will be on me which is why I am trying to find out the worst case scenario. If I can somehow arrive at an estimate, I can build it into my investment and figure out if I can still come out ahead. As I stated in the original post, there are many variables and no one seems to be able to nail down the exact procedure. Probably because there really isn't a "procedure" due to the limited understanding and diversity of how title companies/individuals with the company could choose to handle it. 

@Steve Babiak My first property was a sheriff's sale and I took possession at the end of September. Disbursements were completed, but I did not receive a copy of them. In February of the following year, I received an overdue property tax bill. (3000!) Since the bill was not technically "due" (the bills are sent out in July, but you can make installments until December) at the time of my purchase, it was not distributed. The sheriff's office wiped their hands of it and said it was all on me. 

I thought it was a bunch of BS since it was a technicality that they obviously knew about and I didn't. But I guess even if I had known, I still would have had to pay it. Minus the penalties, of course. Anyway, lesson learned. Ask for a disbursement sheet and assume property taxes will not be paid. At least in my neck of the woods here in Lancaster County, PA.

@Steve Babiak yes!!! Thank you! I found this thread soon after my post. I was not searching specifically enough. All of you provided so much helpful information. Somehow, my posted question became severely diverted to TX matters, lol! 

I’m still working through all the phone calls and due diligence. I’m not finding many answers. Everything is twice as difficult with the Dept of Revenue only accepting email right now and many still not in the office. 

Anyway, thank you for the direction. I read every word. 

@Wayne Brooks Yes! I found a very helpful conversation about it. I was not being specific enough in my search. Thank you! 

@Greg Wilkins - Very helpful! Thank you.

Hi from Pennsylvania!

I am looking at a home that is foreclosure and is set to sell at a Sheriff's auction. The title search returned that the property is encumbered at 145K. The owner, who is still on the deed/title, passed away in March of 2019 and and estate was not set up. This means that inheritance taxes were not filed. I am trying to understand a worse case scenario of how this could affect me and the flip. I understand that this can cause problems for me when I go to resell because some title companies handle this type of case incorrectly. Apparently, PA is all over the map with a clear understanding of how it is to actually be handled. 

Lets say I purchase this 145k encumbered property for the price of 100K. I do the rehab and proceed to list and eventually sell it for 150K. What is the worst case scenario in regards to the inheritance tax? 

I have heard the following: 1 - If I pay under the encumbered value, there will be no issue. 2 - there is the potential that no matter what I pay, I could be held liable for the 15% inheritance tax on the full amount of the assesed value of the house at the time of the owner's death. 3 - If I pay 150k for the house, I would only be responsible to pay 15% inheritance tax for the difference of 145K (the debt) and what I paid, which equals 15% of $5000.  4 - Pay less than the encumbered amount and "direct" the sale to a title company who knows the law and what they are doing. If I do it this way, could this title problem show up again in later years if the next person want to sell the house? (to me, this is an ethical/moral issue that I do not want to be a part of) 5 - RUN away from this property as you could be facing over 20k of inheritance taxes and fees that would be a a total nightmare. Something a large scale company could handle, but not someone in my financial position. 

This could potentially be my second flip. I am working with cash and I am a single mom who does not have the luxury of making a costly mistake so early in this business endeavor. I do not qualify for a mortgage (yet!) because I was a stay at home mom for years, so what I have is all I have to invest. 

I would value your input and knowledge if you have any experience with Inheritance taxes/foreclosures/no estate/deceased owner. 

Thank you!

Renee

Thank you for your response! 

What is the process if the listing runs out? Is it then fair game to make an offer or do I simply express my interest in writing? Should I involve my buyer's agent at that point? It is currently vacant so I am actually not sure how to even contact the owner other than walking up to the front porch and dropping a letter in the mailbox. 

Investment Info:

Single-family residence fix & flip investment in Manheim.

Purchase price: $138,000
Cash invested: $27,000
Sale price: $249,900

1930's Traditional Craftsman Home

How did you find this deal and how did you negotiate it?

Sheriff's sale

Good morning! I'm writing from Lancaster, PA

I have recently been introduced to bigger pockets and have listened to several podcasts. I recently heard one which suggested to write a letter to a home owner offering to buy their home that is currently on the market. With all the content on this site, I have been unable to find it again. Would anyone be able to point me in the right direction to find information on this topic? I cannot remember the official term used to describe this method which makes it even more difficult!

I have an opportunity near me to offer on a home that has been on the market for several months. I think it is overpriced and I know it needs work. I would love to reach out to the owner directly via a letter and offer but i wanted to be sure that I do it carefully and armed with all the correct advice to do it properly!

Do you offer a price right away or leave that open ended? What research should I be doing to ensure that I offer fairly the first time? 

Thank you in advance for any advice you can offer!

Renee