If you’re selling an inherited property, it usually means that you’re dealing with a loss of some kind and are also going through the process of grieving for someone.
At this time, for you to be thinking about selling inherited property seems ridiculous, but, unfortunately, it’s something that just has to be done.
Selling inherited property can also be difficult in other ways, such as getting the right price (sentimental attachment to a property often means you will expect more money for the property than its actual worth) and having to consider things such as the inheritance and capital gains taxes, as well as the speed at which you’d like to sell the house.
An awful lot goes into selling inherited property, but with the right information and guidance, you can truly simplify the process. That’s why we’ve created this guide on everything you need to know when it comes to selling inherited property.
The first thing you’ll need to do when selling inherited property is apply for probate.
This is important because it gives you the legal right to deal with what is, in the eyes of the law, someone else’s property.
If you’re selling the property, you obviously need this legal right. And remember, if you’re named in the deceased’s will, you still have to apply for probate.
It will make things a lot easier if you are named on the will as it means that you already have legal standing as someone who is supposed to take control of the estate as you have been nominated by the former homeowner.
If anyone is likely to try and apply for probate of the estate but you are named in the will, you will have all the ammunition possible to ensure that the estate does finally rest in your hands.
However, if there is no will left and thus no one nominated to be the executor of the estate, you still have to apply to probate, but you will be applying for what is known as a ‘grant of letters of administration’.
You can apply for this if you are a relative or close friend of the deceased and if you are granted the estate, you will be given the same authority over it as an executor (someone who was named in the will and has been given the estate through probate).
Instead, you will be called an ‘administrator’, but this is the same thing as an executor.
When it comes to applying for probate, you can do it yourself or with the help of a solicitor. You will need to go through a lot of paperwork and you will also need a lot of information, such as bank statements, to get possession of the estate and keep all of the deceased’s finances in order.
Also, be aware that when dealing with banks and other companies, you may have to provide a copy of the death certificate, so be sure to have those on hand for when they are needed.
Oftentimes when a property is inherited, it is a sudden event and everything is disrupted by it.
The sudden nature of death also means that any outstanding bills are not paid, as is the same with ongoing payments for things like gas, electricity and water.
Moreover, there are other things to organise like paying council tax and contacting the mortgage provider if that applies to the property.
It’s important that these bills and ongoing costs are dealt with appropriately when selling an inherited property so that there is no confusion for anyone involved and the companies are aware that their contract with the deceased can no longer continue.
As well as this, it’s important to have this all sorted out so that the new owners of the house aren’t bombarded with a whole load of correspondence from companies trying to get what they think is owed money.
Also, seeing as the property is empty, you will have to inform the company who insures the house about this and apply for empty house insurance.
This is usually cheaper than other kinds of house insurance, and it’s just something that you should do out of courtesy during the period of time in which you’re trying to sell the property.
Don’t forget to look into this as you will also be helping yourself in the long run.
As we’ve already hinted at, once you inherit a property, all kinds of things kick into action regarding money and the law.
Taxes are absolutely no exception to this and they are one of the things you have to deal with when selling inherited property in two main forms.
Inheritance tax is one of the most well-known taxes out there, largely due to the political controversy surrounding it.
However, such controversy is irrelevant when it comes down to the fact you have to pay it if circumstances fit the criteria.
Basically, you will pay inheritance tax on a property if it is valued at over £325,000.
However, if the estate is inherited by children or grandchildren, inheritance tax is only paid if the estate is worth over £425,000.
The executor or administrator of the will is the one who has to pay the inheritance tax and they have up to six months after the death to pay the tax.
Money made from the sale of the estate can be used to pay the tax, which is currently set at a rate of 40% on anything above the threshold.
Another tax that you should be made aware of is the capital gains tax. This tax is on the profit you make from the sale of the estate that you’ve acquired.
The rate for capital gains tax on residential properties is 18%, so factor this into all of your budgeting and financing along the way.
Capital gains tax will have to be paid by the executor/administrator just like the inheritance tax, so make sure you’re aware of this before you agree on a price to sell the property at.
After you’ve been through probate and have factored in paying the inheritance tax (if applicable) and capital gains tax, it is time that you look towards putting the inherited property on the market.
The most common way of selling a property is indeed through a local estate agent, and in terms of selling an inherited property, it is one of the easiest ways to do it.
The estate agents will know the area well enough to make a good and accurate valuation on the house (unlike online estate agents which are much less specialist) and can do all of the photography, marketing and advertising all for you, as well as negotiation on the sale price.
If you’re struggling with a bereavement, this can be one of the best ways to sell the inherited property.
Moreover, you will have to get in touch with a local estate agency anyway so that they can give you a valuation for the estate which is necessary when applying for probate.
Keep in touch with them throughout the process and it’s likely that you will just sell the property through that agency, which is great.
Of course, there are alternatives, and when it comes to bereavement, you might want the quickest sale possible. That will probably happen if you go to auction with the property, where there are a wealth of buyers looking for a property that very day, and have the funds to buy it immediately and outright.
It is unlikely that you’ll make the kind of money you’d like from an auction sale if it’s quick, but it gets the inherited property out of your hair, which is one option to consider if you’re grieving.
One piece of advice we would give, however, when it comes to selling inherited property is to treat it like any other property. If you’re selling a house, you want to ensure that it is the best version of itself it can be.
Therefore, you may need to put a bit of money into getting any outstanding repair work done and DIY jobs completed.
Ensure the house looks fresh by giving certain areas new licks of paint, some fresh flowers in a vase and tidying up the garden, especially if you’re selling during the autumn or springtime. Just make sure that you can confidently sell the house without having it hanging over you for too long.
That way, you’ll be able to let go a lot easier and quicker, which is usually exactly what you want when selling an inherited property.
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