Even real estate agents keep their ear out for bereavements. The Real Estate Agents Authority heard a case against one agent who sent a condolence card to a grieving widow with a printed property summary report. The family was not amused and the authority found the agent had engaged in "unsatisfactory conduct".
Some people who inherit a home may want to sell it off quickly and selling to a bounty hunter can mean escaping marketing fees. It's vital, however, to get an independent registered valuation to make sure you're not being taken for a ride by the buyer. A few hundred dollars spent on the valuation can pay off handsomely.
Beneficiaries may be tempted to upgrade the house before selling. But this isn't tax deductible and sometimes it's just worth cleaning it up and selling it without doing major works. There are plenty of buyers who relish a do-up.
If one member of the family is buying the property from others, then take care, says lawyer Tony Steindle of Steindle Williams Legal. The process of setting the price can sometimes create family conflict.
If you are buying from the estate, adds Steindle, also make sure you get a LIM report and a building report to ensure there are not hidden defects.
"Often, as it is related parties, this process is missed," he says.
There are numerous tax consequences for inheriting property, says accountant Michael Turner of Withers Tsang & Co.
"While there is no inheritance tax in New Zealand, there may be tax consequences which may cause the deceased's wishes to be compromised."
If you inherit then sell a family home straight away there are no specific tax consequences -- even with the new rules from October on speculators who buy and sell property within a two-year period.
If you want to convert an inherited property to a rental there is a number of questions to ask yourself, says Turner: Will you need to borrow to buy out family members? Is there still a debt on your family home? Is the property likely to make a profit or loss? And, are you an experienced landlord? Accidental landlords can sometimes make a hash of renting a property out.
Kiwis often inherit properties that are already rented. These can come with nasty tax stings in the tail if you are not a close relative of the person who died.
In that case the Inland Revenue Department treats the property as if it has been sold to you at market value, says Turner. In that situation the IRD will try to claw back depreciation. Suddenly, beneficiaries find themselves having to pay tens of thousands of dollars to the IRD, which forces the sale to pay the taxes.
There are other traps. If the will states that the sofa from your rental property, for example, shall be given to your tenant because he really liked that couch and all other rental property assets are distributed to close relatives, all of your property will be treated as if it were sold to the beneficiaries at market value.
Or, if the deceased person has left a life interest in a rental property to their spouse or left the property in a testamentary trust to children, the same nasty consequence arises.
There are ways around these various unexpected tax bills, but it requires professional advice and tax planning when creating a will, says Turner.
Inheriting a property comes with legal fish-hooks as well. Williams points out that an inherited house is individual, not relationship property. It only stays that way, however, if it is kept totally separate from a partner.
"It is rare that you actually inherit a specific property," says Steindle. Usually, it's cash from the sale and many couples do not keep the money separate.
They may use some of it to pay their mortgage on their house or, in fact, put relationship money into the inherited home. Once they've done that the inheritance is no longer separate property.
