If you have recently inherited a property, the decision about potential next steps can be daunting. It is important to be fully aware of what is required of you, what you’ll need in order to be successful in selling the property, and to know where to go for expert information or support.
In the initial stages, there are a few important issues to address in order to make preparations before a sale. Firstly, consider the nature of your inherited property and the type of ownership you have; are you the sole inheritor, or will a decision be required as a group? Depending on whether a valuation of the property has already been performed (e.g. if a person had this calculated in their will), you may need to find out how much the property is valued at. Alongside this, it is essential to be clued up on how tax on inherited property works, and how this may be affected by the sale of the estate.
You will need to have a Grant of Representation, or ‘Probate’, before you are able to sell the property. Finally, consider your selling options – are you looking for a fast and efficient sale through a specialised company, or are you looking to do the work yourself?
Types of ownership
Property is often passed to descendants or beneficiaries through the terms of a deceased person’s will. However, rules differ according to how the property was owned and split, and how this might be addressed in the deceased person’s will. Be sure you have a clear idea of how your share works, and if you have the permission of other parties to sell the property.
If, as addressed on the UK Government’s website, property was previously owned through a ‘joint tenancy’ agreement, the property would usually automatically go to the surviving partner(s). Clearly, it is important to establish effective communication regarding the sale if property is distributed through more than one heir.
Once you are clear on the particulars of owning the inherited property, you will need to consider how the law on Capital Gains of probate property may affect the sale of your house.
Taxes on property
Inheritance Tax is usually paid by the estate of the deceased, as the UK Government’s website points out. However, you may need to pay Capital Gains tax if you sell the property at a profit at a later time. These rules are different if you live abroad, and separate rules may also apply if you own another home.
Calculating whether a profit will be made on a sale involves a calculation of the market value of the property. This is required for an evaluation of Inheritance Tax value, so can usually be found in this way (if this has been calculated by the benefactor). In some cases, the value of the property may not have been calculated before the person died. In this case, an estimation of the worth of the property is required before anybody has the legal right to deal with the estate. You can do this by hiring a Chartered Surveyor to estimate the value of the property, or by utilising the services of estate agents to provide a probate property valuation. Using the average value of 3 estate agents’ estimations, HMRC will use this value to calculate any Inheritance Tax due.
Where an executor has been named, they can apply for a grant of representation, which gives them the authority to deal with the matters of the estate.
To successfully be granted a Grant of Representation (or ‘Probate’), applicants will need to provide several pieces of information about the person who has died, including details on their assets, legal status, copy of their will, death certificate, and codicil if relevant, and a summary of their inheritance tax details, and send this to the relevant Probate Registry. This process can take some time – with a straightforward sale taking a minimum of 2-3 months.
Once Probate has been granted, you have a few options in the selling of the estate. You can choose to undertake the selling of the property as an individual, or enlist the help of experts to take off some of the pressure. Companies such as Probate Purchasers often ensure a quick and efficient sale of probate property, for example.
Essential knowledge and considerations
It is important to have a good knowledge of the processes required of you, before an inherited property can be sold successfully. It may be an idea to make a list of the questions you need to answer: how the property may be divided between stakeholders, if all of the relevant valuation information has been gathered, and if any Capital Gains tax will apply when you sell the property.