Inheriting a house can be a life-changing event, but it often comes with questions and uncertainties. One of the most common queries is “Can I live in an inherited house?” The short answer is yes, but there’s more to consider.
Living in an inherited house is possible, but it’s not always straightforward. Your ability to move in depends on several factors, including the terms of the will, any existing mortgages, and whether you’re the sole beneficiary.
If you’re the only person named in the will to inherit the property, you’ll have more freedom to decide what to do with it. However, if you’ve inherited the house jointly with siblings or other beneficiaries, you’ll need to agree on how to proceed.
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Can I Live In An Inherited House?
Living in an inherited house is a possibility, but it depends on several factors, including the terms of the will, the type of property ownership, and the agreement among beneficiaries.
When you inherit a house, you may need to pay inheritance tax. In the UK, there’s typically no inheritance tax to pay if the estate’s value is below £325,000, or if everything above this threshold is left to a spouse, civil partner, or charity.
If the estate’s value exceeds this threshold, you’ll need to pay 40% tax on the amount above it. However, if you inherit your parents’ or grandparents’ home, this threshold can increase to £500,000.It’s important to note that inheritance tax must be paid within six months of the person’s death.
Mortgages & Inherited Properties
If the inherited house has an outstanding mortgage, you’ll need to decide how to handle it. You could:
- Take over the mortgage payments
- Sell the property to pay off the mortgage
- Use other inherited assets to clear the debt
Remember, if you choose to keep the property and continue mortgage payments, you’ll need to pass affordability checks with the lender.
Living in the Inherited House
If you decide to live in the inherited house, you’ll need to:
- Transfer utilities into your name
- Inform the local council for council tax purposes
- Update the property’s insurance
- Register your ownership with the Land Registry.
Understanding Property Ownership
There are three main ways you might inherit a property or a share of one in the UK:
- Joint Tenancy: If the property was held under a ‘joint tenancy’, the surviving owner inherits it automatically.
- Outright Ownership: If the property was owned outright by the deceased or jointly by owners who have died, the terms of their will(s) determine who inherits.
- Tenancy in Common: If the property was owned as a ‘tenancy in common’, the deceased person’s share is inherited according to the terms of their will. If there is no will, intestacy laws apply.
Options for Beneficiaries
When you inherit a house, you have three main options:
Sell the Property: You can sell the inherited property, but you may need to pay inheritance tax or capital gains tax on the proceeds.
Rent Out the Property: You can rent out the inherited property to generate income, but you’ll need to pay tax on the rental income and follow relevant laws on property safety.
Live in the Property: You can live in the inherited property, but you’ll need to consider the terms of the will, the type of property ownership, and the agreement among beneficiaries.
Tax Implications
When inheriting a property in the UK, there are several tax considerations to keep in mind:
| Tax Type | Description |
|---|---|
| Inheritance Tax | If the total value of the deceased’s estate exceeds the inheritance tax threshold (£325,000 for individuals or up to £650,000 for married couples and civil partners), inheritance tax may be due on the excess amount at a rate of 40%. |
| Capital Gains Tax | If you decide to sell the inherited property and it has increased in value since the deceased’s death, you may be liable for capital gains tax on the profit. |
| Stamp Duty Land Tax | If you choose to keep the inherited property and it’s worth more than £125,000, you may need to pay stamp duty land tax when transferring ownership. |
Do I have to pay stamp duty on an inherited property?
You don’t pay stamp duty when you inherit a property. However, if you later sell the property, the new buyer will need to pay stamp duty.
Can siblings force the sale of inherited property?
If siblings can’t agree on what to do with an inherited property, they can apply to court for an ‘order for sale’. However, this should be a last resort after all other options have been exhausted.
If there are multiple beneficiaries and disagreements arise, it’s essential to resolve the situation through open and honest communication:
Family Meetings: Gather all beneficiaries to discuss concerns, expectations, and potential solutions.
Mediation: A neutral third party can help facilitate a resolution.
Seek Legal Advice: Consult with a solicitor specialising in probate and inheritance disputes to understand your options and protect the estate’s interests.
Renting Out the Inherited Property
If you don’t want to live in the inherited house but don’t want to sell it either, you could consider renting it out. This can provide a steady income, but remember:
- You’ll need to pay income tax on rental profits
- You’ll have responsibilities as a landlord
- You may need to obtain a buy-to-let mortgage
Insider’s Tips
- Register the Property: Once the property passes to you, register your ownership at the Land Registry to ensure proof of ownership.
- Consider Mortgage Payments: If you inherit a property with a mortgage, you’ll be responsible for the monthly payments, even if you don’t live there.
- Get Professional Advice: Seek advice from a solicitor or tax specialist to understand your specific tax obligations and legal responsibilities.
- Don’t rush into decisions. Take time to consider all your options.
- Get professional valuations of the property.
- Consider the emotional value as well as the financial value.
- Keep communication open with other beneficiaries if the property is jointly inherited.
- Understand all tax implications before making decisions.
Selling the Inherited House
If you choose to sell the inherited property, you’ll need to consider:
- Capital Gains Tax implications
- The current property market conditions
- Any necessary repairs or renovations before selling
Property Saviour can offer expert advice on selling inherited properties, ensuring you get the best possible outcome. We’re here to help you through every step of the process.
Can I live in an inherited house before probate?
It’s not recommended to live in an inherited house before probate, as administrators and executors have absolute power to decide how the estate is handled.
Do I have to pay inheritance tax on my parents’ house?
You may be required to pay inheritance tax if the total value of the deceased’s estate exceeds the inheritance tax threshold.
Can I rent out an inherited property?
Yes, you can rent out an inherited property, but you’ll need to pay tax on the rental income and follow relevant laws on property safety.
How long do I have to sell an inherited house?
There’s no set time limit for selling an inherited house. However, if you want to avoid potential Capital Gains Tax, it’s best to sell as soon as possible after inheriting.
Experience Seamless Selling
Selling a property through traditional channels can be a gruelling and frustrating experience. Estate agents often promise the world but deliver little, with endless viewings, tedious negotiations, and a fragile chain of buyers and sellers that can shatter at any moment. Their fees can be exorbitant, and after months of waiting, there’s no guarantee of a sale. The process can be emotionally draining, leaving you feeling like you’re stuck in limbo.
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