What to do with inherited property

I am in a good position. One day I will inheritate a property in melbourne. I estimate this in todays market to be worth at least $3 million. It is a very unique property as my dad has built the property to be singled level and it is of a high standard. You can go from one end of the property to the other end of the property (over 800 square metres of land with not much of a backyard, with a wheelchair, due to no steps or step).

Anyway here is my thoughts on it

1) To sell the property as I think it's too good for me to live in and I'm not really interested in living in it

Arguments against the above.

1) This property is my dad's legacy. He also owns a property in Sydney that has been owned in the family since the 1800's. So legacy is a big deal to me.
2) If I was to sell the property, I will really need to make good use of the sale proceeds because of thelegacy issue. My plan would be to buy a cheap but nice PPOR (Melton, Werribee, etc) and invest the rest in blue chip stocks and managed funds (maybe a property as well).
3) I have the option of renting the property out but I have grave concerns about this due to the property not being looked after properly and the yiled being crap. I want to be proven wrong on this point.

So should I sell this property, make this property my PPOR (it is a nice property close to the CBD) or should I rent it out. If it wasn't for the legacy issue I would sell it straight up, but interested in peoples views onb this.

 

Is your dad still alive? If so and your inheritance is at some time in the future I wouldn't worry too much about it for now.

Lots can change in the meantime, including your own financial situation

 

Live in the property and enjoy........that was easy eh?

 

Get your dad to get some legal advice - best if you have the option to inherit via a testamentary discretionary trust. Rental income could be streamed to children at adult rates, huge asset protection advantages as well as ongoing estate planning advantages.

 

How long does a testomentary trust last for? Is it 80 years, or last forever?

 

Depends on the terms of the will, but the laws against perpetuity apply so a max of 80 years outside SA, in SA potentially forever.

 

In my view you need to change your thinking about the potential damage by tenants thing. If you think outside the square there can be a wonderful outcome here. Maybe talk to some of the non-for-profit groups that do great work with disabled people. You could stitch up a first class tenant and improve the life of some less fortunate people, at the same time as earning a great long-term income for yourself. A great way to uphold Dad’s legacy. Get the right group and they will respect the property and possibly hand it back in better condition then when moved in. In any case getting repairs done is relatively easy - acquiring super-duper property is much, much harder.

 

Do you have any siblings who would love this property?

 

Important question:

Is there debt agains the property or is it owned outright?

 

Foxy I really like your idea. If I can get a land tax exemption I might do what you are saying but at below market rent or zero rent and the tenant is responsible for the up keep.

 

Hopefully hes not a member of property chat

 

He can cry on gockies mums shoulder

 

Special purposed houses attract a smaller level of interest from buyers due to the amount of money required to get it back to 'normal' expectations.

 

Also get advice from a taxation consultant regarding inheriting properrty. There are special rules which to property once it is inherited from a tax perspective. ie: There is a special window in which the property will not attract a CGT if the property was PPOR. I believe it is 2 years. I think it also matters if it will become your PPOR or IP. If IP CGT is calculated from the date of transfer after a valuation is done. This is my general understanding of it. But obviously seek professional advice. It may be the difference between no tax and a hell of a lot.

 

I am in a very similar position, except i am in real time. I am currently awaiting probate.

Start talking about it now, if there are few parties involved, you can never prepare (legally) too early.

1st and foremost. Find out what your father wants, if legacy is the most important thing to you, base your future around that. 2ndly, as your father gets older he may find it hard to maintain IP's. I am currently working through IP's trying to make them livable again, as my family members got old and neglected them, the more run down they get the lower class tenants you get and come probate time, you better hope you have some cash because your up for alot of $$$ to get them to a reasonable quality to liquidate or rent.

As for PPOR, it depends on your situation, married with 3 kids?
25 and single?
Are u an accountant or a builder?
Do you have the yearn to liquify and develop?

There are so many questions, and you'll just keep asking your self another one everytime you think about it.

Good luck.

 

oh and as said previously,
Spend the money on a good accountant and solicitor.
I will come back to you 10 fold!

 

Sell them off to Hungry Jacks.
This country needs more cheap and convenient food outlets to help fuel the impoverished FHB's.