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Inheriting Property in Texas: Everything You Need to Know

In a perfect world, inheriting property from a loved one would be a simple and uncomplicated process, especially during a time of loss. However, that is not always the case. The property you inherit comes with responsibility for what is left behind. This could include a mortgage, maintenance costs, the possibility of overdue property taxes, etc. Not to mention, the process of inheriting a property when a homeowner dies without a will can add to the confusion. Here is a quick guide to help you navigate through this process of inheriting property in Texas and everything you need to know.

When Does Someone Inherit Property?

When a homeowner dies, family members typically look for a Last Will to determine who receives the assets from the descendant’s estate. However, determining who inherits the estate is a bit more complicated if a homeowner dies without leaving behind a will, also known as intestate. If this situation occurs, most people tend to avoid a probate process to save time and money. Without a probate process, this will require an Affidavit of Heirship (AOH) signed by uninterested parties stating who should inherit the property. To qualify as an uninterested party, the person must be knowledgeable of the deceased and his or her family’s history without receiving any financial gain from the estate.

Who is Responsible for Delinquent Property Taxes and Mortgages?

If you are declared the legal heir, then the property will be transferred over to you, making you responsible for all costs associated with the property. This includes paying off all property taxes and relevant penalties owed as well as paying any mortgage or liens against the property. These taxes may be substantial, especially if the taxes had been deferred for many years prior to the inheritance. Learn more about the different laws and tax exemptions such as capital gains taxes, federal estate taxes, and more in our previous blog, Paying Taxes on an Inherited Property in Texas.

However, if you inherited a portion of the property, you would only have to pay taxes on the portion you hold ownership of. This occurs when a property is divided amongst siblings or relatives, either determined by a descendant’s will or by the court.

How to Qualify for a Homestead Exemption

To qualify for homestead exemption, you must hold ownership of the property and choose this property as your primary residence. Even if you have inherited a property, this same rule applies. If the home you inherited is your primary residence and you choose to apply for a homestead exemption, then you can qualify for a full homestead exemption. When you apply, you will want to make sure you are listed as the “heir property owner” when filling out Form 50-114.

Ways to Pay Delinquent Property Taxes on an Inherited Property

Inheriting property with property taxes owed is something you will want to take care of immediately. By letting those overdue property taxes go unpaid, you will continue to accrue penalties and interest each month. Additionally, taxing entities will often accelerate foreclosure proceeding upon the death of the owner, which could result in loss of the property. Here are three ways you could avoid this and pay off your delinquent property taxes through a plan that works best for you.

  • Sell the Property – If you choose to sell the property because you don’t want or need the home, then it is important to sell it as soon as possible. This way the proceeds can be used to pay off the delinquent taxes without accruing any more penalties.
  • Rent the Property – Renting out the property could be a great way to receive additional income. However, this situation is most practical if you live near the property. If you don’t, you will have to hire a landlord to manage the property for you. You will also want to pay the property taxes as soon as possible to avoid late fees and the possibility of foreclosure.
  • Property Tax Loan – If you decide to keep the property as a rental home or live in it but are not prepared for the sizeable property tax bill, a Johnson & Starr residential property tax loan is a great solution. Johnson & Starr offers Texas property owners fair, flexible, and easy-to-understand loans that relieve the stress of burdensome past-due property tax bills. Contact us today so, we can work together on a plan to take control of your property taxes.
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