You have just inherited a property, and according to research, 36% of us are likely to do so.
This can be a very emotional time especially if you have inherited as a result of a relative’s death.

Certain questions will spring to mind immediately – should you rent it, sell it, or move into the property.

If you are the executor or beneficiary, you will have to wait until probate is complete. This means that you don’t have to rush to make a decision. It can sometimes take several weeks until probate is granted. Probate is when the executors of the will sort out the deceased’s affairs and settle any outstanding debts before assets are handed over to the beneficiaries. There is very little that can be done at this time. However, it is a good idea to create a short-term plan to maintain the home whilst the estate settles. You’ll also need to provide for the upkeep of the property and start thinking through your long-term goals. Discuss any ideas with siblings or any other heirs who may have a stake in the property.

During probate, the executors of the will are required to transfer ownership of the property into the beneficiary's name via the land registry – these forms are available on the government website.

If there is a mortgage on the property, lenders are usually sympathetic. It is a good idea to inform the mortgage company as soon as possible. Most mortgages do have a grace period which means repayments can be suspended until the estate is sorted. When a person dies without a will, you would need to apply for a ‘grant of representation ‘ to access the bank account. If the deceased person has life insurance, then this can be used to clear the mortgage. If there was no life insurance, then the lender can let you know what is expected.

The property is yours once the executors of the will have settled debts and taxes.

Inheritance Tax could be due. If the combined value of the deceased’s estate comes to more than £325,000 then 40% will be due to pay to the taxman. If you sell the property, then you would also have to pay capital gains tax.

Capital gains tax is only due on a property if you decide to sell. Capital gains tax is also due on any profit. This is levied at 18% on gains from residential property if you are a basic-rate income tax payer. If you are a higher or additional rate taxpayer, then the rate rises to 28%. Everyone gets a capital tax allowance of £12,000.

Inheritance tax is due within 12 months of death and should be settled by the executors of the estate. It is possible that this can be paid in annual instalments, which should hopefully avoid a situation where the property has to be sold to settle the inheritance tax bill.
Income tax is due if you start earning income from the property however, stamp duty is not levied on inherited properties.

If you decide to sell the property, then it is a good idea to start clearing the contents.

Keep you items you want to keep, sell or donate others. If the contents are worth money, then sell via an auctioneer – we recommend Hartleys’ Auctioneers in Otley.

If the deceased person has lived in the property for a number of years, then it is likely that there is some de-cluttering that needs to take place. At David Phillip Estate Agents, we can also recommend a decluttering company.

If the property is being sold and it does require some modernisation, it may be helpful to strip out the carpets and paint the walls – this will make the property look more appealing. At David Phillip Estate Agents, we can recommend the best course of action in terms of updating.

Once the property is on the market, then it is generally the same as selling any other home. You can also market the property whilst it is going through probate, however, you cannot complete on the sale of the property unless probate has been granted. This can take a number of weeks or even months if the estate is a complicated one.

If this is the first property you have owned, once inherited, it means you are no longer a first-time-buyer, which means you may have to forfeit any Government initiatives currently in place.

If you have inherited a property that is currently being rented out, then you may become what is known as an ‘accidental landlord’ – this happens because you weren’t initially intending to become a landlord, but circumstances have forced you to become so.

The third and easiest option is to move into the property. You will need to put the property in your name on the mortgage if there is one. At this point, you will have to pass the usual affordability and credit checks.

Hopefully, the above answers some of the initial questions you may have, but it is always better to contact your solicitor. If you do require a probate valuation then call David Phillip FRICS on 0113 4676400. David has been undertaking probate valuations for many years, and will assist with any questions you may have.

David Phillip Estate Agents, 86, Leeds Road, Bramhope, Leeds LS16 9AN, covering Bramhope, Pool-in-Wharfedale, Adel and Cookridge

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