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Can Inherited Property Be Sold?

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Inheriting a property can be both a blessing and a burden. While it may provide financial security, it also involves emotional and financial complexities. One of the most common questions that arise is: Can inherited property be sold? The answer is yes, but there are several factors to consider, including taxes, legal processes, and different methods of sale.

In this article, we will do our best to cover this topic comprehensively.

Table of Contents

Can Inherited Property Be Sold?

When you inherit a property, you become the new owner, and you have the right to sell it. However, before you proceed, it’s essential to understand the various taxes and legal obligations involved.

Inheritance Tax

Inheritance Tax (IHT) is a tax on the estate (property, money, and possessions) of someone who has died. In the UK, the standard IHT rate is 40%, but it only applies to the part of the estate that exceeds the tax-free threshold of £325,000.

If the property is left to children or grandchildren, the threshold can increase to £500,000.

When is Inheritance Tax Due?

Inheritance tax becomes due within six months of obtaining a grant of probate or a letter of administration (if there is no will).

  • Value of the estate: If the estate’s value is below £325,000, no IHT is due.
  • Spouse or civil partner: If everything is left to a spouse or civil partner, no IHT is due.
  • Charity: If 10% or more of the estate is left to charity, the IHT rate may reduce to 36%.

Capital Gains Tax

Capital Gains Tax (CGT) is payable on the profit made from selling an asset that has increased in value. For inherited property, CGT is calculated based on the property’s value at the time of inheritance and the sale price.

How to Reduce CGT Exposure?

There are a few reliefs:

  1. Annual Exemption: Each individual has an annual CGT exemption (£6,000 for the 2023/2024 tax year).
  2. Principal Private Residence Relief: If the property was the main residence of the deceased or the beneficiary, this relief can reduce or eliminate CGT.
  3. Spouse Exemption: Transferring the property to a spouse or civil partner before selling can utilise their CGT exemption.
can inherited property be sold
As we always say get the best solicitor who understand property taxes and double check their advice with an accountant.

Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) is not payable when you inherit a property. However, if you decide to buy out other beneficiaries’ shares or purchase another property, SDLT may apply.

 

SDLT Rates for Additional Properties

This table shows stamp duty rates for additional properties:

Property ValueStandard RateAdditional Property Rate
Up to £250,0000%3%
£250,001 to £925,0005%8%
£925,001 to £1.5 million10%13%
Over £1.5 million12%15%

How Do I Sell an Inherited Property?

Selling an inherited property involves several steps:

  1. Obtain Probate: Probate is the legal process of administering the deceased’s estate. You need to obtain a Grant of Probate to sell the property.
  2. Valuation: Get the property valued to determine its market worth.
  3. Clear Debts and Taxes: Ensure all debts and taxes, including IHT, are paid.
  4. Choose a Selling Method: Decide whether to sell through an estate agent, auction, or a property-buying company such as Property Svaiour.
  5. Prepare the Property: Clean and repair the property to make it attractive to buyers.
  6. Market the Property: List the property and start the selling process.

Do I Need to Pay Tax on Rental Income from an Inherited Property?

Yes, if you decide to rent out the inherited property, you must pay Income Tax on the rental income. The tax rate depends on your total income and tax bracket.

What Happens if I Inherit a Property with a Mortgage?

If the inherited property has an outstanding mortgage, you must continue making the mortgage payments. You can either pay off the mortgage, transfer it to your name, or sell the property to settle the debt.

can inherited house be sold
Make sure your property has full empty property insurance cover.

Insurance Considerations for an Inherited Property

When inheriting a property, it’s important to ensure it is adequately insured. Here are the types of insurance you may need:

  • Unoccupied Insurance: If the property will be vacant for more than 30 days, you will need unoccupied home insurance. This typically requires regular checks on the property and maintenance of visible areas.
  • Landlord Insurance: If you plan to rent out the property, standard home insurance won’t suffice. Landlord insurance covers rental properties and includes liability coverage.
  • Second Home Insurance: If you move into the inherited property but keep your original home, you may need a second home insurance policy.

 

Living in the Inherited House Before Probate

Living in an inherited house before probate is granted can be complicated. Legally, the property is not yours until probate is complete. However, there are situations where living in the property might be necessary or beneficial:

  1. Caretaking: If the property needs maintenance or security, living there temporarily can be practical.  Just ensure your siblings or a cousin hasn’t moved in forever and now refuses to leave.
  2. Executor’s Decision: The executor of the will has the authority to allow someone to live in the property, provided it doesn’t conflict with the will’s terms or other beneficiaries’ rights.

Emptying the House Before Probate

Emptying an inherited house before probate can be a delicate task. Here are some steps to consider:

  • Inventory: Create a detailed inventory of all items in the house.
  • Valuables: Secure valuable items and important documents.
  • Sentimental Items: Discuss with family members to decide on the distribution of sentimental items.
  • Professional Help: Consider hiring a professional clearance service to handle the process efficiently.

 

Should you decide to sell to us at Property Saviour, we will provide you with a free house clearance service.

Methods of Sale: Pros and Cons

When it comes to selling your property, there are several methods to consider, each with its own set of advantages and disadvantages. Here, we will explore the pros and cons of selling with an estate agent, through a property auction, and with Property Saviour.

 

Selling with an Estate Agent

Pros

  1. Professional Valuation and Marketing: Estate agents provide a professional valuation and market your property through various channels, ensuring it reaches a wide audience.
  2. Negotiation Skills: Agents have the expertise to negotiate the best possible price on your behalf.
  3. Handling Paperwork: They manage the paperwork and liaise with solicitors, reducing the administrative burden on you.
  4. Market Knowledge: Agents have in-depth knowledge of the local market, which can help in setting a realistic price and attracting serious buyers.

Cons

  1. High Fees: Estate agents typically charge between 0.75% and 3% + VAT of the final sale price, which can be a significant cost
  2. Time-Consuming: The process can take several months, from listing to completion, which may not be ideal if you need a quick sale
  3. Potential for Over-Valuation: Some agents may over-value your property to win your instruction, leading to longer time on the market and potential price reductions later.
  4. Chain Risks: Sales can fall through if other transactions in the chain collapse, causing delays and uncertainty.  

 

Selling at a Property Auction

Pros

  1. Quick Sale: Auctions can result in a sale within 6 to 8 weeks, from listing to completion.
  2. Chain-Free: Auction sales are typically chain-free, reducing the risk of delays.
  3. Transparent Process: The auction process is transparent, with all bids made publicly, ensuring a fair sale.
  4. Attracts Investors: Auctions attract a mix of buyers, including investors looking for renovation projects, which can be beneficial if your property needs work.

Cons

  1. High Fees: Auction fees can be substantial, including entry fees and commission, which can be higher than estate agent fees.
  2. No Guarantee of Sale: There is no certainty that your property will sell at auction, and if it doesn’t, you still incur costs.
  3. Price Fluctuations: The final sale price can be unpredictable and may be lower than expected if there is limited interest.
  4. Quick Process: The fast-paced nature of auctions can be daunting for some buyers, potentially limiting the pool of interested parties.

 

Selling with Property Saviour

Pros

  1. Guaranteed Price: Property Saviour promises to honour the price agreed upon, with no last-minute reductions.
  2. Quick Completion: They can complete the sale in as little as 10 days, providing a fast and efficient solution.
  3. No Fees: Property Saviour covers your legal fees up to £1,500, and there are no estate agent or auction fees to worry about.
  4. Cash Buyers: As genuine cash buyers, they do not rely on mortgages or bridging loans, ensuring a smooth and reliable transaction.
  5. No Surveys or Valuations: Unlike other buyers, Property Saviour does not require surveys or valuations, eliminating potential delays and complications.

Cons

  1. Potentially Lower Offers: While Property Saviour offers a quick and hassle-free sale, the offer may be lower than what you might achieve through an estate agent or auction.
  2. Limited Market Exposure: Selling directly to Property Saviour means your property is not exposed to the open market, which could limit the potential for competitive bidding.

 

Comparison Table

MethodProsCons
Estate Agent– Professional valuation and marketing
– Negotiation skills
– Handling paperwork
– Market knowledge
– High fees
– Time-consuming
– Potential for over-valuation
– Chain risks
Property Auction– Quick sale
– Chain-free
– Transparent process
– Attracts investors
– High fees
– No guarantee of sale
– Price fluctuations
– Quick process can deter buyers
Property Saviour– Guaranteed price
– Quick completion
– No fees
– Cash buyers
– No surveys or valuations
– Potentially lower offers
– Limited market exposure

 

Conclusion

While each method of selling a property has its own set of advantages and disadvantages, Property Saviour stands out for those seeking a quick, reliable, and hassle-free sale. With guaranteed prices, no fees, and the ability to complete in as little as 10 days, Property Saviour offers a compelling alternative to traditional estate agents and property auctions. If you need certainty and speed, Property Saviour is the ideal choice.

Sell with certainty & speed

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Property Saviour Price Promise

  • The price we’ll offer is the price that you will receive with no hidden deductions.
  • Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
  • These valuations or surveys result in delays and price reductions later on.
  • We are cash buyers.  There are no surveys.
  • We always provide proof of funds with every formal offer issued.
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We'll Pay £1,500 Towards Your Legal Fees

  • No long exclusivity agreement to sign because we are the buyers.
  • You are welcome to use your own solicitor. 
  • If you don’t have one, we can ask our solicitors for recommendations.
  • We share our solicitor’s details and issue a Memorandum of Sale. 
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Sell With Certainty & Speed

  • Our approach is transparent and ethical, which is why sellers trust us.
  • 100% Discretion guaranteed. 
  • If you have another buyer, you can put us in a contracts race to see who completes first.
  • Complete in 10 days or at a timescale that works for you.  You are in control.
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