How do you sell an inherited house?
Selling a can be challenging at the best of times, but when you also have to contend with the loss of a relative or close friend, the whole process can feel rather daunting.
In this article, we try to make things a little easier by breaking down all the information you’ll need to consider when selling an inherited property. This will include…
- Your legal responsibilities
- Financial matters
- Documents required
As well as how you can make the whole process move quickly and efficiently.
For more tailored advice, don’t forget you can always talk to a member of our team here.
What happens when you inherit a property?
You will find out if a property is left to you during the reading of the will. If a will is present, you’ll be able to learn who has inherited the property, as well as who is the executor of the estate. This is the person who will be responsible for ensuring the wishes expressed in the will are carried out.
What happens if there isn’t a will?
Don’t panic if there isn’t a will. You can apply for a ‘grant of letters of administration’. This will give you access to the deceased’s bank account, so you can pay for the funeral expenses and sell off any assets. However, do keep in mind that you will also be liable to cover any debt the person may have accumulated.
Grant of Probate explained
In order to take ownership of the inherited property, the executor will need to apply for a Grant of Probate, which can be obtained from the Probate Registry. Getting hold of a probate typically takes 8 weeks and you’ll need to sit tight until it comes through. Legally, you can’t make any financial actions until the probate has been resolved.
When you’ve been granted probate, you can pay off any associated debts, close the subject’s accounts, divide up the estate, and sell the property. Only when the debts have been cleared and taxes paid will the probate end.
When is Probate required?
When someone passes away, in around 50% of cases a probate will be required. However, under these circumstances, you can get by without one…
- No property is involved and the person only had savings.
- No property is involved and they only have assets worth £5000 or less.
- The property or land is jointly owned – so it passes to the surviving owners.
What tax do you need to pay on inherited property?
If you’ve acquired any property or land, it’s likely there will be one or more taxes involved. These could be…
This tax will be applicable if the total value of the deceased estate is more than £325,00. Included in this total will be property, savings, shares, plus any other inherited assets.
However, some family members are exempt from this or enjoy higher thresholds.
- Spouses, civil partners, and charities are exempt from paying inheritance tax on the estates they inherit.
- Children (including adopted, foster or step-children) and grandchildren only pay when the estate is over £500,000.
Inheritance tax currently stands at 40% and is only charged against the part of your estate that is above the threshold.
Example: If the estate is worth £400,000, the 40% tax will only be applied to the £75,000 which sits above the threshold.
Capital gains tax
You will only need to pay capital gains tax if the value of the property or land has increased since you acquired the inheritance.
However, you will likely be exempt from this tax if you are either a spouse or civil partner. Likewise, if you have already paid inheritance tax, then you would only need to pay the tax at the point of sale – though even this you might be able to waver.
Basically, it’s worth discussing the requirements with a tax advisor!
If you’ve inherited a buy to let or holiday home, then you will have to pay income tax on any money you receive from these assets.
Working out if you want to sell
When it comes to an inherited property, you have three options to consider. You could either…
- Sell the property
- Rent the house out to tenants
- Move into the property
Selling a inherited property
Selling a property might be the easiest option in the long-run, but it does present a lot of work in the short-term. Our research shows that selling a property the traditional way can take between 5-7 months, and this doesn’t include the time it takes to get it ready for viewings. To reach the best price, you’ll likely want to clear out the items you don’t want, as well as do some renovation work.
Top tip: while traditional selling methods can take months, there are solutions to sell your house fast – keep reading to learn more!
Renting the house out
You may decide to become what is known as an ‘accidental landlord’, meaning you’ve ended up with more than one home and now you want to rent one of them out. Before you go looking for some tenants, make sure you alert the mortgage provider (if applicable) about the change in circumstance. You’ll also need to brush up on the tax involved, landlord obligations, and the required insurance policies.
Move into your inherited property
If you want to live in the property, you’ll need to check if there isn’t still a mortgage in place. If so, you’ll have to contact the lender and get this put into your name. It’s up to you whether or not you stay with the same lender or go looking for a new deal. However, do bear in mind you will be subject to credit checks.
How can I sell an inherited property quickly?
Selling a property can be a challenge, as you might not necessarily live nearby or even in the same country. Likewise, you might not have time to handle the ins and outs of the selling process, such as renovating, finding a buyer, surveys, conveyancing and keeping your fingers crossed the chain doesn’t fall through.
However, selling a house doesn’t need to take the best part of a year. You can sell an inherited property in as little as 7 days.
IBuyers, such as UPSTIX, are able to make instant cash offers. This means, for a discount from the market rate, you can sell your property as quickly as you like – with only the conveyancer fees to contend with.
If you’re looking for ease and convenience, this can be a great option to explore.
Selling the inherited property with tenants living there
If you inherit a buy to let with tenants in place, then it can be tricky to sell. You’ll need to check the rental agreement to see what terms have been put in place. This can mean you need to wait until the contract expires before you’re able to move them out and sell it as an empty unit.
Otherwise, if you can sell with the tenants in place but many estate agents are wary of taking these properties on, you may find you don’t get the full market value of your home.
Alternatively, you may find some iBuyers who will take on properties mid-tenancy. At UPSTIX, we’ll make an instant cash offer for your property and we also prioritise selling tenanted properties to those who will keep the occupants in place long term.
Selling a property that’s co-owned by other family members
If you want to sell but your siblings or other co-owner doesn’t, then things can get complicated. The easiest option is to have the other co-owners buy you out, giving you a share of the current market value. If this isn’t possible, then you can try to force a sale by getting a county court judgment – though you should seek legal advice before it comes to this.