Inheriting a house can be a life-changing event, bringing with it a mix of emotions and financial responsibilities. When you inherit a house, it means that you have been left a property by a deceased relative or friend, and you are now responsible for managing and maintaining it.
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What Does It Mean When You Inherit a House?
Inheriting a house involves several steps and considerations, from applying for probate to transferring the property’s title deed into your name. Here’s a comprehensive guide to help you understand the process and your options.
Applying for Probate
When someone passes away, the executor of their will applies for probate, a legal process that allows them to gather and evaluate the deceased’s assets, pay any bills, and distribute the estate according to the will. If there is no will, the next of kin applies for a grant of administration, which gives them the legal right to deal with the estate.
Valuation & Assessment
As part of the probate process, the value of the deceased’s estate, including the property, is assessed. This involves obtaining a valuation of the property to determine its market worth. The property may need to be professionally appraised for this purpose.
Inheritance Tax
Inheritance Tax may be payable on the deceased’s estate if its value exceeds certain thresholds. The executor or administrator is responsible for calculating and paying any Inheritance Tax due. The standard Inheritance Tax rate is 40%, but it can be reduced to 36% if 10% or more of the net value is left to charity.
Transfer of Ownership
Once probate is granted and any Inheritance Tax liabilities are settled, ownership of the inherited property can be transferred to the beneficiaries. This typically involves transferring the property’s title deed into the names of the beneficiaries through a process known as conveyancing.
Managing the Property
After inheriting the property, the new owner(s) must decide what to do with it. They may choose to live in the property, rent it out, sell it, or otherwise dispose of it. If the property is rented out, the new owner(s) become responsible for managing the tenancy agreements, collecting rent, and maintaining the property.
Home ownership Responsibilties
As the new owner(s) of the inherited property, they assume all legal and financial responsibilities associated with homeownership, including paying property taxes, insurance, utilities, and maintenance costs.
Options for Inherited Properties
Here are three main options for inherited properties:
- Sell the Property: The inherited property can be sold in the same way as any other property. However, you may be required to pay Inheritance Tax or Capital Gains Tax on the proceeds.
- Rent Out the Property: You could rent out the inherited property to give yourself another means of income. This is ideal if you’re eager to retain ownership over the property but still want to use it to generate money as an investment.
- Live in the Property: If you inherit the property with a mortgage, most lenders will offer you a grace period to suspend repayments until probate is complete and the property is in your name. However, you will still need to pass the lender’s affordability and credit checks if you want to live in the property and continue paying the mortgage.
Inheritance Tax Thresholds
This table gives a breakdown of different inheritance tax thresholds:
| Threshold | Inheritance Tax Rate |
|---|---|
| £325,000 | 0% |
| £325,001 – £500,000 | 40% (reduced to 36% if 10% or more is left to charity) |
| Above £500,000 | 40% |
Insider’s Tips
- Create a short-term plan: Maintain the home while the estate settles, considering upkeep and long-term goals.
- Seek legal advice: Independent legal advice can help you make the best decisions as the administrator or executor of the deceased’s wishes and estate.
- Consider estate planning: Proactive estate planning, including the creation of a living trust, can help you and your family avoid probate and make inheritance simpler for your heirs.
Can I live in an inherited house before probate?
It’s generally not recommended to live in an inherited house before probate, as administrators and executors have absolute power to decide how the estate is handled. It’s best to receive independent legal advice to ensure you make the best decisions.
What are the financial and legal responsibilities of inheriting a home?
As the new owner(s) of the inherited property, you assume all legal and financial responsibilities associated with homeownership, including paying council tax, insurance, utilities, and maintenance costs.
Get Peace of Mind
Estate agents often charge high fees, which can eat into your profit margins, and there’s no guarantee of a sale. Moreover, the process can be slow and frustrating, with viewings and negotiations that may not lead to a successful sale.
Auctioning off your property can also be risky, as you may not get the price you want.
In contrast, selling to Property Saviour offers a hassle-free and quick solution. We are real cash buyers, meaning there’s no borrowing from banks or bridging loan companies, and we’ll always honour the price we agree on. With Property Saviour, you can avoid the stress and uncertainty of traditional property sales and get a smooth transaction. Request a call back today to learn more about how we can help you sell your property quickly and efficiently.
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.
