Whether to rent or sell an inherited property depends on your financial situation and emotional attachment. If you have inherited a house from your parents, it is important to weigh up your options.
Here’s a comprehensive guide to help you make an informed decision.
Table of Contents
Selling an Inherited Property
Selling can be a quick way to cash in on your inheritance. Here’s what you need to know:
Pros of Selling:
- Get a lump sum of money fast
- Avoid ongoing costs of property ownership
- Sidestep potential family disagreements over the property
- No need to become a landlord
Cons of Selling:
- Might miss out on future property value increases
- Possible capital gains tax on profits
- Emotional difficulty of parting with a family home
If you decide to sell, make sure you:
- Get the property valued by local estate agents
- Consider any renovations that could boost the sale price
- Be aware of inheritance tax implications
- Choose the right time to sell based on market conditions
Renting Out an Inherited Property
Renting can provide a steady income stream. Here’s what to consider:
Pros of Renting:
- Regular monthly income
- Property may appreciate in value over time
- Potential tax benefits from rental expenses
Cons of Renting:
- Becoming a landlord comes with responsibilities
- Ongoing costs for maintenance and repairs
- Dealing with problem tenants
- Possible void periods with no rental income
If you choose to rent, remember to:
- Research local rental prices
- Budget for landlord insurance and maintenance costs
- Decide if you’ll manage the property yourself or use an agent
- Understand your legal obligations as a landlord
Should you sell or rent an inherited house?
Deciding whether to sell or rent an inherited property can be a challenging decision.
Consider the costs of selling or renting, including taxes, maintenance, and potential income. Assess your emotional readiness to part with the property or manage it as a rental.
- These are some of the questions you should consider:
- Does your inherited property require updating to meet the current legislation?
- Do you have access to cash, time to manage the refurbishment and a trusted builder to renovate the property?
- Do you have time to legally fulfil your duties as a landlord?
- Do you have the expertise to vet the tenants, obtain references and ensure that they pay you rent on time?
- Who will be responsible for maintenance of property during tenancy?
- Perhaps you are thinking how can I sell my own house and live in inherited one?
- Or would you rather release the equity tied up in your inheritance?
Making Your Decision
This table shows pros and cons for selling or renting an inherited property:
Aspect | Selling via Estate Agent | Selling via Auction | Selling to Property Saviour | Renting Out |
---|---|---|---|---|
Time to Sell/Rent | 14-23 weeks | 6-8 weeks | 2 weeks | Maximum 4 weeks |
Success Rate | 51% | 78% | 100% | 100% |
Sale Price | Highest possible | Unknown until auction day | 80-85% of market value | N/A |
Viewings/Chains | Inconvenient times, many in chains | Viewings and surveys | No viewings or chains | Tenant viewings |
Fees | Agent and legal fees | Auction and legal fees | No fees. Legal costs paid. | Management fees |
Contract | Lengthy, can’t withdraw | Committed to the auction process | No contracts, flexible | Rental agreement |
Your choice will depend on various factors:
- Your financial situation
- The property’s location and condition
- Your willingness to be a landlord
- Tax implications
- Emotional attachment to the property
Don’t rush into a decision. Take time to weigh up your options and seek professional advice if needed.
Insider’s Tips for Inherited Properties
- Check the property’s condition before making any decisions
- Look into any outstanding mortgage or debts on the property
- Consider the tax implications of selling vs renting
- If there are multiple beneficiaries, ensure everyone agrees on the plan
- Keep detailed records of all property-related expenses
Money Matters
If the property holds special memories, you might want to keep it. This could mean living in it or renting it out. If you share ownership with family members, you’ll need to agree on what to do. Different opinions can make the decision more complicated and can lead to disputes.
There are a couple of money related matters to bring to your attention:
- Capital Gains Tax (CGT): If the property has increased in value since you inherited it, selling might mean paying CGT. This tax is on the profit you make from the sale, which can affect how much money you actually take home.
- Inheritance Tax: If the total estate value is above a certain threshold, you might have to pay inheritance tax, which can be quite hefty at 40% on the amount over the threshold.
- Rental Income: Renting out the property can provide a regular income, which might be useful if you don’t need a large sum of money right away. Who will manage the property and what percentage of income they will receive if property is jointly inherited?
- Maintenance Costs: Owning a rental property means you’ll need to pay for upkeep and potential repairs, which can add up over time.
What taxes do I need to consider when selling an inherited property?
When you sell an inherited property, you may be liable for Capital Gains Tax (CGT) if the property’s value has increased since you inherited it. The standard rate for Inheritance Tax is 40%, charged on the part of the estate above the threshold.
Example: If you inherited a property valued at £300,000 and sold it for £350,000, you might owe CGT on the £50,000 gain.
You will also have to pay inheritance tax at 40%.
Can I sell an inherited property without probate?
You can sell an inherited property without probate if you are the surviving owner and the property was owned as joint tenants. Otherwise, probate is required to transfer the ownership legally.
What happens if one sibling refuses to sell inherited property?
If one sibling is refusing to sell the property then you have three options:
- Buy Out: Purchase your sibling’s share.
- Rent Out: Rent the property to your sibling.
- Order for Sale: Apply to the court for an order for sale.
Weighing the Options
Let’s break down the pros and cons of selling versus renting your inherited property. This comparison should help you see which option might work best for you:
Consideration | Selling | Renting |
---|---|---|
Immediate Cash | Get a lump sum of money | No large cash sum, but regular income |
Tax Implications | Pay CGT on profits | Pay tax on rental income, potentially less than CGT |
Maintenance | No ongoing responsibilities | Responsible for upkeep and repairs |
Emotional Attachment | Hard to let go if attached | Keep the property and memories |
Market Timing | Important to sell at the right time | Less affected by market ups and downs |
Steps to Selling an Inherited Property
Inheriting a property is an emotional time, and if you ever lived in the house, it could make it difficult to know what to do.
You may have inherited a property with regulated tenancy and wish to sell it. We can help with this because we like to buy properties with long-term tenants. Their rent may be lower than market rent, but they tend to look after their homes.
- Clear the Property: Remove personal items and clean thoroughly.
- Get a Valuation: Obtain valuations from multiple estate agents.
- Prepare for Sale: Make necessary repairs and improvements.
- List the Property: Choose the best method (estate agent, auction, or property-buying company such as Property Saviour).
- Negotiate Offers: Work with your chosen method to complete the sale.
Is your inherited house currently mortgaged?
Please check if there is a life insurance policy that can pay off the balance. If this is not the case, you will need to contact the bank to ask for a grace period to settle your probate affairs.
Our guide goes through more details in what to do if you have inherited a house with a mortgage. Ignoring this could result in repossession proceedings and potentially losing your inherited property or ending up with a large unexpected bill from mortgage lenders’ solicitors.
Don’t Let Delays Cost You: Sell Your Inherited Property Quickly
Inheriting a property can be a blessing, but delaying its sale can quickly become a financial burden.
From mounting costs to potential risks, procrastinating on selling an inherited property can have severe consequences. Here’s why you should act swiftly and sell your inherited property without delay.
Capital Gains Tax Interest
When you inherit a property, the clock starts ticking on paying Capital Gains Tax (CGT) on any increase in value since the previous owner’s death. CGT is due within 60 days of the property’s sale, but if you delay the sale, interest charges from HMRC can quickly accumulate, eroding your potential profits.
Professional Executor Fees
Ongoing Maintenance and Insurance Costs
The Risks of Inaction
These are some of the risks involved with inaction:
Break-ins, Vandalism & Arson Attacks
Vacant properties are prime targets for criminal activities such as break-ins, vandalism, and even arson attacks. These incidents can not only cause significant damage to the property but also pose safety risks and legal liabilities.
Deterioration and Devaluation
Without regular maintenance and occupancy, inherited properties can quickly fall into disrepair. From leaks and mould to structural issues, neglected properties can rapidly lose value, making them harder to sell and potentially costing you more in repairs.
The Solution: Sell Quickly and Securely
Steps to Renting Out an Inherited Property
The first issue is that this may not be just your decision but a shared one if the house has been left to more than just one beneficiary. In this case, you will need to agree on what to do next, and this should be a written contract, ideally using a solicitor.
- Decide Ownership Structure: Choose the most tax-efficient method. A limited company is the most efficient structure, but you will have to pay SDLT and other taxes.
- Finance Options: Consider taking out a mortgage or remortgaging.
- Get Permissions: Obtain consent to let from your lender and arrange landlord insurance.
- Prepare the Property: Ensure it meets all legal requirements and is habitable.
- Find Tenants: Market the property and screen potential tenants.
- Manage the Property: Handle ongoing maintenance and tenant issues.
Can I rent out an inherited property without fixing it up first?
While you can rent it out as-is, it’s best to ensure the property meets safety and habitability standards. Unresolved issues can lead to unhappy tenants and potential legal problems.
Should I sell or keep an inherited property?
Landlords are often portrayed in the media as being filthy rich. With constant landlord bashing in the media, there are over 200 different types of government legislation to comply with. Even the most competent letting agents struggle, and ultimately, the buck stops with you as a landlord.
Will the house need any renovation, for example, making it legal to let? Redecoration is something, but there can be a lot of hidden costs, particularly if you are not familiar with the landlord law.
You should not just move in or let it without checking it’s safe for you to do so or let it legally to a tenant, even if it’s a friend or a family member. A RICS surveyor can save you a lot of time and energy in determining what must be done. If you move in yourself, then do get an extra survey on the gas and electrics; if letting, this is essential as you will need safety certificates to let it legally.
If you decide to let it, the property will need regular maintenance, and should anything go wrong, you will need to have enough money to pay for the expense. Over time, this may cost tens of thousands of pounds for items like a new boiler, roof or windows.
Whatever you decide, take professional advice from an independent financial advisor and a RICS property surveyor. It may be wise to consider whether rental income after tax will be worth your while or whether selling the inherited property for a substantial cash lump sum will allow you to invest in more tax-efficient investments.
How long do I have to sell an inherited property?
There’s no set timeframe, but selling within a year can help avoid capital gains tax on any increase in value.
Can I rent out an inherited property with a mortgage?
Yes, but you’ll need to inform the mortgage lender and possibly switch to a buy-to-let mortgage.
Unlock the Potential of Your Inheritance
Inheriting a property can be a significant financial boon, but managing or selling it can also be a daunting task. Property Saviour offers a seamless, stress-free solution to help you unlock the full potential of your inheritance. Imagine what you could achieve with the immediate cash from selling your inherited property:
- Pay off your mortgage: You can free yourself from the burden of monthly mortgage payments and gain financial peace of mind.
- Extend Your Home: Use the funds to add that much-needed extension, creating more space and increasing the value of your current home.
- Go on a Dream Holiday: Treat yourself and your loved ones to the vacation of a lifetime, creating unforgettable memories.
- Work Part-Time: Gain the financial flexibility to reduce your working hours and enjoy a better work-life balance.
Why Choose Property Saviour?
- Real Cash Buyers: We are genuine cash buyers, meaning no delays or uncertainties associated with bank loans or bridging finance.
- No Hidden Fees: We cover all legal fees, ensuring you receive the full agreed amount without any deductions.
- Quick and Guaranteed Sale: The sale can be completed in as little as 10 days, and there is no risk of the deal falling through.
- No Surveys or Viewings: We buy properties in any condition, so you won’t have to deal with multiple viewings and intrusive surveys.
- Honest and Transparent: We honour the price we agree on and never lower it before the exchange of contracts.
Realise Your Dreams with Property Saviour
Selling your inherited property to Property Saviour is not just about the financial gain; it’s about the opportunities and freedom it brings. Whether you want to pay off debts, invest in your home, or simply enjoy life more, we make the process easy and rewarding. Contact Property Saviour today and take the first step towards transforming your inheritance into the life you’ve always dreamed of.
Naturally, it is in the interest of all beneficiaries that the sale can be concluded quickly and at a fair price, as delay can reduce your share of inheritance money.
The property may not be fully insured once it has been unoccupied for more than 28 days. Insuring an empty property can cost thousands of pounds per year because it can attract the attention of squatters, criminals who want to steal copper pipes, amongst other things and unruly children “playing at your property” and vandalising it.
Do not worry about the condition of your inherited property. We are non-judgemental property professionals looking to breathe a new lease of life into properties. We will buy your property in its current condition.
Our service is 100% free. Our cash offer is what you will receive with zero deductions and no hidden fees. Be careful, as there are “We Buy Any House Companies” that will make you an unbelievable offer only to delay, frustrate you months down the line and then pay you a lot less once they have found faults with your property. We have an open and honest approach, which can be seen in our client reviews.
Give us a call on 0113 320 6700 or make an enquiry now to see how we can help you. We are very quick to return your call, and an offer can be made usually within 24 hours.
Sell with certainty & speed
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.
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.
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.