Here, The Property Buying Company offer expert advice on the process of inheriting a property, providing all of the information that you need to know
Inheriting a property can often feel quite intimidating. You’ll potentially be grieving the loss of a loved one, plus you now have the responsibility of a new property to manage or sell as you decide is appropriate. Selling a house fast is easier to do when you have no emotional attachment to the property or if you are the sole beneficiary. If the property has been left to multiple people then more than one person will be making the decisions and sharing any financial gain. But what does the probate process look like and what’s involved?
First things first
Probate is the process that takes into account any wishes stated within a will and transfers a deceased person’s estate to any beneficiaries. If there is no will then the process becomes slightly more complicated. However, a grant of probate will usually take 6-8 weeks to arrive, followed by the finalisation of any issues of inheritance which can add a further 3-6 months into the process. This process can take longer if there is more than one property involved or if there is a dispute between any beneficiaries.
If no will has been left, the next of kin should apply for a ‘grant of representation’ in order to gain probate i.e access to their bank account and personal effects. Once probate has been granted, you can access the deceased’s funds in order to pay any outstanding debts, cover funeral costs and arrange for the sale of their property. You’ll need to consider any taxes that will have to be paid.
When you’ve inherited a property, you may be liable to pay inheritance tax. Should the combined estimated worth of the property and assets amount to more than £325,000 then you will have to pay inheritance tax within 6 months of inheriting the property, at a rate of 40%. If you decide not to sell the property straight away, you will have to pay Capital Gains tax. This is a tax on the increased value of your property during the time you’ve had it. You’re able to make £12,000 worth of profit before Capital Gains tax kicks in.
Rent or sell
If all parties are agreed, you may wish to rent out a property you’ve inherited and receive a steady stream of income that you can split equally. If the property market isn’t great or you’re in no real rush to sell then renting could be a good solution. If any renovations need to be carried out or you don’t live close by then you may need to spend a bit of money on upgrading the property and getting an agent to manage it. Look into how time-consuming being a landlord can be and this will help you to decide what to do for the best.
If you want to sell the property, you’ll need to decide whether to invest time and money in renovating it to achieve the best possible price or do the basics. Sometimes a clearout, fresh coat of paint and tidying up the garden will be enough to get it on the market, but get valuations done so there will be no surprises should you decide to sell. Remember that a property cannot be sold without an up-to-date Energy Performance Certificate (EPC) document. If it is more than 10 years old, you will need to get it updated.
It is important to check if the property still has a mortgage because you’ll be responsible for paying this until you make a decision on the future of the property.
You should rent out or sell an inherited property when you feel ready for it because it can feel a bit overwhelming otherwise. As long as you have a clear head and clear ideas of what you want to do with the property then things should be pretty straight forward. It also helps if all beneficiaries are on the same page. If you’re worried that you might regret selling the property in years to come then take a step back and, as long as you have the correct insurance in place and taxes covered, you can sleep on it for a while. Alternatively, if you don’t want to pay for the ongoing bills on the property, over an extended period of time, it is worth considering what to do with it and getting the process started.
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