How to Sell Inherited Property
It’s extremely difficult to cope with the grief of losing a loved one. Having to also deal with the financial and legal matters that come with a will and inherited property can be just another burden that you don’t need. As part of that, you will have to decide whether you want to keep the property or sell it on. Selling an inherited house can potentially bring stresses of its own, with complex issues around capital gains tax and inheritance tax.
Our guide can help to simplify the process of selling inherited property.
Is the property mentioned in the will?
The first step in selling an inherited property is to locate the will of the deceased. This legal document will name the executor, who will be responsible for dealing with the estate. It will also name the beneficiaries, who will inherit something from the estate, or sometimes the entire estate. The deceased may have told you where their will is kept, or you may be able to contact their solicitor. If the deceased hasn’t left a will, the estate is usually then administered by their next of kin.
You may find it beneficial to have a discussion with a legal professional about where you stand before you sell any property. If you are the executor for the will, the next step is to apply for probate.
What is probate?
Probate is the legal process of dealing with the property, money and other possessions that belonged to a person who has died. It gives the executor the authority to handle the property of the deceased and also anything else left in their name, such as accessing their bank accounts.
As part of the probate process, you will need to get the property valued as soon as possible, even if you’re not planning on selling it right away. This is because HMRC has a six-month deadline to pay inheritance tax, the amount of which will depend on the value of the estate.
What taxes do I have to pay on inherited property?
In England and Wales inheritance tax is only paid on an estate that is worth more than £325,000. If you are a direct descendant of the deceased, such as a child, grandchild, or great-grandchild, including step and foster children, the estate must be worth over £500,000 to be subject to inheritance tax. If you are the spouse or civil partner of the deceased, you will not have to pay any inheritance tax.
Sometimes inheritance tax can be paid from the estate of the deceased, organised by the executor of the sill, so the beneficiaries do not have to pay. You may be able to pay the inheritance tax in instalments over a period of ten years, but HMRC will charge interest in addition to the original amount.
If you decide to let out the inherited property, you will have to pay income tax on the rent you receive. This will have to be declared in a self-assessment tax return annually.
There are many contributing factors for the tax you pay for inherited property. A tax advisor or accountant will be able to advise you on what taxes you’re liable for in your particular situation.
Do I have to pay capital gains tax on inherited property?
You will only have to pay capital gains tax on inherited property if the value of the home goes up between your initial valuation and when you come to sell it. Calculating how much capital gains tax you will have to pay can be complex as there are many factors involved. HMRC have a calculator to help you work it out for your situation.
There are two ways that you can prevent having to pay any capital gains on inherited property. If the home becomes the main residence that you live in and you do not rent it out, you will not have to pay capital gains tax.
The other way to avoid paying capital gains on inherited property is to sell the house quickly after valuation. Then you avoid the chance of it increasing in value before you sell it. SmoothSale can purchase your home in as little as seven days if you’re looking to sell your house fast.
Selling inherited property
After you have sorted out the legal necessities, you may be ready to sell your inherited property. There are a few options for how you can do this.
You may wish to sell via a traditional estate agent. You will be able to speak face to face with an agent, but it can be a very long process, taking months to reach completion. Sales can fall through due to breaks in the property chain and you may find it difficult to sell if the property needs refurbishment. The more delay there is between the property being valued and completing a sale, the more likely the value will increase, and you will be subject to capital gains tax. Traditional estate agents also often have high fees to pay.
You could also sell your inherited property via auction. However, this can take just as long to organise as selling through a traditional estate agent. You may still need to pay fees, depending on the auction house, and you may go through the entire process just to not receive any bids on the property and not be able to sell.
Another option is to use a trusted property buyer, like SmoothSale. We can take away the stress of selling an inherited property with a fast, cash sale. We have the funds ready to buy your house so we can secure a quick sale for you. With SmoothSale, you’re guaranteed to sell your property as we don’t rely on third parties and we’re not part of any property chain.
If you choose to sell with SmoothSale, our in-house, expert team will handle all the proceedings for you. We’ll sort all the legal procedures and you’ll only ever deal with us directly. You can sell your house for free with us as we cover all the legal fees and have no hidden costs.
We can sell your inherited property in whatever timeframe you need and can buy any type of home in as little as seven days. Contact us for a no-obligation cash offer or call us on 0113 539 660 to speak to one of our property experts who will be able to assist with your situation.