Inheriting a property can be an unexpected surprise, as it offers a lot of possibilities for you and your family. But before you can enjoy the benefits there will be quite a few questions that need to be answered regarding the property’s legal status and much more. Here we take a closer look at what’s involved with inheriting a house.
I’ve inherited a property – what now?
There are host of legal matters to deal with when it comes to inheriting a property, so be sure to check these have all been checked and completed before your move in or sell:
- Check the will
Verify if you are the executor or beneficiary in the will. If a will doesn’t exist, the law determines who gains inheritance. A ’grant of administration’ can be applied for by the next of kin to prove their legal right to deal with estate affairs.
- Probate details
This is when the executors deal with the affairs of the deceased and can take some time to complete. All assets of the deceased are assessed – including money and property – and it is used to pay any outstanding tax or bills that may exist.
- Mortgage status
Check to see if the property has a mortgage attached to it. If there is, most will have a grace period where repayments are suspended until the estate affairs are finalised. You will take on the mortgage payments once the property legally becomes yours.
- Ownership transfer
If the property is sold or mortgaged, you can register the property at the Land Register once probate is finished and ownership is transferred to you. This ensures you have clear proof of ownership for anything you decide to do in the future.
What taxes are due on an inherited property?
There are a few different types of tax to pay with an inherited property:
- Capital gains tax
You may have to pay capital gains tax on the property if you sell, with the amount varying depending on the sale price.
- Inheritance tax
If the estate (including shares, property, savings and other assets) is valued at more than £325,000, you will have to pay inheritance tax.
- Income tax
This is due on any rent income you receive if you have inherited a buy-to-let or holiday home.
Transfer ownership of an inherited property
The probate process involves transferring ownership of the property into the beneficiary’s (your) name. You send an application form to the Probate Registry and are required to fill in three forms to transfer the property:
- AP1: An application to change the registered homeowner.
- TR1: Enables you to transfer a registered property.
- ID1: Proves your identity and must be signed by licensed conveyancer or solicitor.
You then pay the relevant fees and submit this to the Land Registry. It should take around 5-6 weeks for the transfer to be completed.
Shall I keep, sell, or rent out the property?
Whether to keep, sell or rent out the property is the next decision you will have to make. Some things to consider include:
Move into the property
You could move into the property yourself. If there is a mortgage on the property this will have to be transferred into your name. This requires you to undergo the usual credit and affordability checks to ensure you can afford the mortgage (if there is one). However, if you have a big emotional attachment to the property, moving in and calling it your home could prove difficult.
Selling the property
There will likely be a lot of work involved in selling the property, as you will have to ensure it is in a sellable condition. This means decluttering, cleaning and redecorating, if needed. There is a big upside to selling as you can make a healthy profit once it is put onto the market.
While selling the property may seem like a sizable task, working with a reputable agency like Squires can make things more manageable. We can give you a free valuation of the property, offer guidance on staging the property, market it to attract serious buyers and make the entire process far less stressful.
Letting the property
Another option is to let the property for people to live in. This means you become a landlord and are responsible for the maintenance of the property and all the associated health and safety checks. It allows you to enjoy a long-term income from your tenants, which could be used to pay off any outstanding mortgage or put towards a pension, for example.
As a first-time landlord there is a lot to take care of before and during the tenancy. Squires can provide a full property management service that makes it much easier to be a landlord, dealing with tenants on your behalf, collecting rent and maintaining the property’s condition, while you always have the final say.