So I’m in unfamiliar territory here in regards to an inheritance, so I figured who better to ask than the experts here. Here’s my situation:
Unfortunately my father passed away a few weeks ago, and my sister and I are the two beneficiaries of his estate. No probate court, no other beneficiaries, just her and I. My sister (who is the executor) doesn’t want the house, and myself being a flipper for the last 15 years or so (as well as looking to add another rental to my portfolio), thought it would be great to just cash her out her half of the equity and keep the house as a rental. But, in order to do that, I would probably have to do a cash-out refi.
My dad owes about $125k and the house is valued around $290k, so if I CO-refi'd I would only need to pull about $60k (and the rest I'd owe her i'd pay her cash out of pocket). I would still have a ton of equity, so I'm fine with it. But can I (or rather, should I) refinance it under my newly formed LLC, or just go conventional and quit claim it to my LLC? Personally, I'd rather keep it out of my name from the get-go, but i have yet to do any business through my LLC, so doing it this way has me a bit confused.
Another option is that I can “possibly” assume the loan as-is. I’d have to have his current lender “approve” me, but they told me that doing this would essentially just remove my dads name off the loan and my name would go on it. Same loan number, same terms, same payments, etc...
I’ve never heard of this, but it does sound enticing as his interest rate is in the low 3’s. Doing it this way though, I’d have to come up with even more cash out of pocket, and I don’t want to leave myself cash poor either.
My sister should have all the required paperwork to be able to put me on title next week. But this where I'm stumped. What should my next step be? Who's name should she put on title? My name? My LLC? I was also told by my CPA that I need to "reset basis" for future tax issues (for when I sell it sometime in the future), so that's another question I have no answer to. I have also been advised not to quit claim it, but do a warranty deed instead. Totally clueless there...
Anybody have any experience in something like this? Im really stuck on how to proceed, and the attorney I consulted with today wasn’t able to paint any sort of clear picture for what I should do. But I did snag a pretty sweet pen. Lol.
Any help, suggestions or recommendations would be greatly appreciated. Thanks!