Home mortgage and inheritance: how succession works and who pays the installments

The death of a loved one brings with it not only the pain of loss, but also a series of practical and legal issues that heirs must address. Among these, one of the most delicate concerns the home mortgage. What happens if the mortgage holder dies? Who must continue to pay the installments? And how do any tax deductions on interest payments work?

Let's address the issue clearly and comprehensively, to understand how to proceed in the event of an inheritance with a mortgage still in place.

Mortgage and inherited debts: what the law says

According to the Civil Code, the deceased's debts, including the mortgage, are fully included in the estate. This means that the heirs inherit not only the assets, but also the liabilities. Upon succession, the recipient of the inheritance becomes responsible for paying the mortgage installments, unless they decide to renounce the inheritance.

Acceptance of the inheritance can occur in three ways:

• Pure acceptance (you receive unlimited assets and debts);
• Acceptance with benefit of inventory (you are liable for debts only up to the value of the assets received);
• Renunciation of the inheritance (you acquire nothing and are not liable for debts).

It is therefore essential to evaluate your financial situation before deciding how to proceed.

Assuming the mortgage: how it works

Being an heir is not enough to automatically become the owner of the mortgage. For the bank to officially recognize the transfer, it is necessary to proceed with the assuming of the mortgage.

The assuming of the mortgage is regulated by Article 1273 of the Civil Code and requires a third party (in this case the heir) to formally assume the deceased's debt with the agreement of the creditor, namely the bank. Only with this deed does it establish who takes over the payment and whether the original debtor (the deceased and his heirs) is released.

If the assumption of debt is not carried out, the bank could initiate foreclosure proceedings against the property, even foreclosure to recover the debt.

Succession and joint mortgage: the case of spouses

A different situation is when the mortgage is jointly held by two spouses. In this case:

• If the mortgage was in both names, the surviving spouse automatically continues to pay their share;
• If, however, it was in the name of only one of the two, but the payments were debited from a joint account, the bank will continue to withdraw the amounts from the account. However, to regularize the situation, it is still necessary to proceed with the assumption of ownership.

In both cases, the surviving spouse can also benefit from the tax deductions on interest payments, provided that they become the sole holder of the mortgage through the assumption of ownership.

Tax deductions on interest payments

One of the issues that most concerns heirs is the 19% deduction on mortgage interest payments for the purchase of a first home, with a maximum limit of €4,000 per year.

If the deceased benefited from it, the right is not automatically passed on to the heirs. To continue to benefit from it, it is essential that the heir formally assumes the mortgage and that the property remains used as a primary residence.

Mortgage and inheritance: how to protect yourself

Dealing with an inheritance involving a mortgage is not easy. Heirs must:

1. evaluate whether to accept or reject the inheritance, considering any debts;
2. contact the bank to arrange mortgage assumption;
3. verify the possibility of maintaining tax deductions;
4. in the event of financial difficulties, consider selling the property or renegotiating the mortgage.

Contacting professionals specializing in inheritance, such as those at Agenzia delle Successioni, is often the best option, as it allows you to avoid mistakes that could have serious financial consequences.