Inheriting a home often comes during a difficult time, and the decisions that follow can feel overwhelming. Sell it? Move in? Keep it in the family and rent it out? For many heirs in Southeast Michigan, renting the home is an appealing way to hold onto the property while it produces income.
Before you list it, here is what to think through.
Understand how property taxes may change
Michigan limits how much a property's taxable value can rise each year while the same owner holds it. When ownership transfers, taxable value generally "uncaps" in the following year and can reset closer to the assessed value. For a home that was owned by the same person for many years, that can mean a noticeably higher tax bill.
Michigan does exempt certain transfers of residential property to close relatives from uncapping. According to the Michigan State Tax Commission's Transfer of Ownership Guidelines, the exemption applies only if the property is not used for any commercial purpose after the transfer. The guidelines note that renting the home for fewer than 15 days in a calendar year is not treated as commercial use, which means a long-term rental may not qualify.
The Principal Residence Exemption is also a factor. A rented home does not qualify for the PRE, so the property will generally be taxed at the non-homestead rate. On the other side of the ledger, review the tax benefits for landlords that may apply once the home is a rental.
Every estate is different. Before making a decision, talk with your estate attorney, tax advisor, and local assessor so your rental budget reflects the real tax picture.
Settle the ownership first
Make sure the estate or trust process is far enough along that you have clear authority to lease the property. If several siblings or relatives inherited the home together, agree in writing on who makes decisions, how income and expenses are split, and what happens if someone wants to sell later. Many families hold the property in an LLC; ask your attorney whether that fits your situation, and see our guide on how to transfer a rental property to an LLC.
Get the right insurance in place
A vacant or rented home needs different coverage than an owner-occupied one. Contact an insurance agent as soon as possible, because some policies limit coverage when a home sits empty.
Take an honest look at the condition
Inherited homes are often well loved but dated. Walk through with a critical eye, or have a professional do it, and focus on:
- Furnace, water heater, roof, and electrical panel
- Smoke and carbon monoxide detectors
- Plumbing leaks and water damage
- Safety items such as railings, steps, and egress windows
- Cosmetic updates that help the home rent, such as paint and flooring
You do not need a full renovation to rent a home, but it does need to be safe, functional, and clean. A make-ready checklist keeps the prep organized, and our list of upgrades that add value to your rental property can help you decide where to spend.
Check local rental rules
Some Southeast Michigan cities require rental registration or inspections before a tenant moves in. Check with the city's building department early so it does not delay your first lease.
Run the numbers
Compare expected rent against the updated taxes, insurance, maintenance, repairs, vacancy, and management costs. A rental analysis based on comparable homes nearby gives you a realistic starting point. Our guides on how to set rental rates in Metro Detroit and what a good ROI on rental property looks like can help you pressure-test the numbers.
Decide who will manage it
Many heirs live out of the area or already have full-time careers and families. Professional management takes day-to-day decisions off your plate, which can also reduce friction when several family members share ownership. Not sure yet? Here are the signs it's time to hire a property management company.
How JMZ Management helps
JMZ Management helps families across Oakland, Wayne, Macomb, Washtenaw, and Livingston counties turn inherited homes into well-run rentals. We handle pricing, marketing, screening, maintenance, and owner reporting, and every owner gets 24/7 access to our online owner portal.
This article is for general information only and is not legal or tax advice.
Get a free rental analysis for an inherited property at jmzmanagement.com/freerentalanalysis or call 248-284-6990.
CONTACT US to learn more about professional property management in Michigan.
