Inheriting a property is likely to be an emotional time, as it generally follows the loss of a loved one, or close family member. Here at Property Buyers Today we’ve put together an easy to follow guide, answering any questions you may have following inheriting a house.
The first thing to point out, if you have just inherited a property, in most cases you won’t need to make any immediate decisions. This means you have time to think through the process and weigh up the right option for you.
You can’t legally do anything with a property until probate is complete. Probate is the process where executors will settle debts and sort out the deceased affairs, before handing the assets over. This could take up to a year.
What does this mean?
If your loved one has a will there will be named executors (a solicitor, relative, or friend). This person is responsible for distributing estate, clearing debts and paying any taxes. This can be a long drawn-out period taking several months.
While this period takes place you will have little say in the property, as it’s not yours until the probate is complete.
However, if there’s a mortgage we would recommend contacting the lender and explaining the situation. Lenders will often offer a grace period where repayments can be suspended until estates are settled.
What happens to a house with no will
If a person died without a will, or spouse, then you need to apply for a ‘grant of representation in order to access their bank account. You will then be able to access funds for the funeral, or for their assets to be sold or passed on to beneficiaries. This also means you’re responsible for settling debts and paying tax.
Inheriting a house with a mortgage
One of the biggest complications that comes with inheriting a home is dealing with the existing mortgage.
Life insurance can be used to clear the mortgage, if the deceased has taken out a policy.
If the mortgage wasn’t covered by life insurance, then you’ll need to liaise with the lender, to see what is expected from you. You may want to check the terms of the mortgage for any details regarding the event of a death.
Once the executors have settled debts and taxes the property can become yours.
If the mortgage is still existing you will need to speak to the lender about getting the mortgage in your name. This can cause complications, especially if you’ve already got a mortgage in your name, so we recommend speaking to a fee free mortgage broker to work out the best option for your circumstances.
Alternatively, you can pay off the property to pay off the mortgage.
Inheritance tax on a house
There are a number of taxes that could be due on the property you’ve inherited.
If the combined value of the deceased estate is more than £325,000 then inheritance tax will be due (property, savings, shares etc). 40% of anything over this amount will be owed as inheritance tax.
Capital gains tax
If you sell the property through an estate agent you will need to pay capital gains tax.
If you have inherited a holiday home, or buy-to-let you will have to pay income tax when you receive an income from the home.
Transferring ownership of an inherited property
This will need to be done during probate. Executors will need to transfer ownership of the property into the beneficiary’s name. This can be done via the Land Registry.
Find the property transfer form at GOV.UK
Inheriting a property with siblings
If you inherit a property with siblings then of course this makes things a little more complicated. You will need to all, or both, agree on decisions.
Selling can be the simplest option, as once it’s sold you can simply split the proceeds.
If you decide to rent out the property you will need to decide who manages what, and how you split costs from earnings.
Whichever you decide, you need to ensure you agree.
Selling an inherited property
Selling an inherited house through a property buying company, like Property Buyers Today, is often the quickest and easiest process which can result in less hassle, and stress, for the homeowner.
Advantages of selling through Property Buyers Today
- A sale can be completed in a matter of days, not months.
- All seller fees involved in selling an inherited property are paid for on behalf of the beneficiaries (incl legal fees, surveys and valuations).
- No lengthy contracts.
- A sale is always guaranteed.
- 24/7 personal support.
If you’ve inherited a property, and would like to sell your house fast, contact us today!