Selling an Inherited Property

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The guide below offers important advice on the various steps involved with inheriting a property and then trying to sell it through the probate process. Be sure to carefully consider all aspects of selling an inherited home and the options available to you before making a final decision.

1. Initial steps of inheriting a property
2. Deciding whether to sell, rent or move into an inherited property
3. Steps to take before selling an inherited house
4. Preparing an inherited house or flat for sale
5. Options for selling an inherited property
6. Taxes you might have to pay with an inherited home
7. Tips for preventing fraud when selling an inherited house or flat
8. Top questions and answers about selling an property you’ve inherited

Initial steps of inheriting a property

The main way that people typically inherit properties is when they are explicitly listed in a will as the designated recipient of a house or flat once the person that wrote the will dies. Even if the deceased person did not have a will, you could still inherit a property, so it’s important to know the steps of inheritance, also known as “probate”.

If there is a will, it will specify an “executor” that will handle all of the work of reviewing and then distributing all of the assets owned by the deceased person, which includes properties. The executor is deemed under the law to be the one responsible for this work. They will first have to settle any debts that the deceased person might have had outstanding. Executors can sell properties and other assets in the will to cover any such remaining debts. If there are not enough assets in the deceased person’s estate to pay off the debts they will be written off.

Once the debts are cleared and settled, if there is still a property that can be passed on to someone designated in a will, that happens next. The executor will then be able to use the Land Registry to transfer the house or flat to the beneficiary. The Land Registry is a non-ministerial department of the UK government that registers the ownership of land and homes in England and Wales.

If there is no will, this is called “dying intestate” and it can be more complicated to decide what is to be done with a deceased person’s property and other assets. In this situation, the next of kin will be called “administrators” and will apply for what’s known as a grant of administration to secure the assets. These grants are given to banks and other entities in the hope of securing a letter of administration that gives someone legally permission to handle the estate. If successful, the administrators can then divide the deceased person’s various assets.

It’s also useful to know that even if you’re designated as an executor of an estate, you can turn down this responsibility and instead probate solicitors will take over the process. It can be advisable to hire a professional for estates that are complicated, such as those wills that include overseas or bankrupt properties. However, in many instances the work of being an executor for a typical estate with an inherited home can be relatively straightforward and you should consider doing it yourself.

Deciding whether to sell, rent or move into an inherited property

Once you have officially inherited a home, you’ll then have to decide what to do with it. Typically most people choose between renting it out, keeping it for themselves, or selling the property.

Renting out an inherited property

Some people who already own homes but inherit a property decide to rent out the latter. This not only avoids the potentially complicated process of trying to sell an inherited house or flat, but it also hopefully provides the beneficiary with extra income from the rental payments.

But there can be some drawbacks of this option, particularly the fact that being a landlord can be a very stressful, time-consuming and costly experience. If there are any problems at the property such as plumbing issues you will be expected to pay to fix them for your tenants.

You will also be liable for income tax on the money that you receive from rent payments. Depending on the level of tax, this may make renting out the home appear to not be a sensible financial decision.

If selling your property with sitting tenants is an option be sure to read our comprehensive guide covering all aspects of the process – Guide to selling with sitting tenants

Moving into an inherited property

A second option is for you to move into the inherited property, whether it is freehold or leasehold. This can be a great decision if you don’t already own a home, although it also can come with some potential cons.

One potential negative factor is that you are given the home and therefore the house-hunting aspect of homeownership never happens. The property you inherit might lack features you are looking for, such as a spare bedroom.

If the home still has a mortgage to pay off then you will also be liable for that and it will transfer into your name, if you clear the required credit and affordability checks. Be sure to properly calculate your projected monthly expenses for the mortgage and other aspects of owning a home.
But if the deceased owner had fully paid off the mortgage and named you to inherit the property, you will be able to simply move into the home and enjoy your new ownership.

Selling a property you have inherited

Although the concept of inheriting a home from someone you knew might at first seem like a financial bonus, there are a number of complications that may prompt a sale of the property rather than living in it or renting it out.

For example, the person who inherited the home will now be liable for any ongoing mortgage payments and other costs associated with it. Whatever your reason for selling, if you have an inherited home you’d like to sell there are number of options available to you.

If there is more than one person designated in a will to inherit a home, sometimes a probate sale of the property is the only viable option because people might have different opinions on what to do with the home. If there is more than one person designated as inheriting the property, typically the proceeds from selling the home will be divided evenly among them.

Steps to take before selling an inherited house

There are several parts of the probate sale process, and the more that you know about each step, the greater the chances that you’ll be able to secure a smooth sale.

Step 1: Apply for probate to sell the home

First, the executor OF an estate will have to ask a probate court to give them a grant of probate, which is authorisation from the court for that person to be in charge of handling a deceased person’s assets. This is a mandatory requirement and you won’t be able to complete a sale without a successful application.

If you visit the UK government’s website you will be able to find a probate application form to begin the process, as well as a form to resolve any inheritance tax issues.

PA1P is the form for those situations where the deceased person left behind a will. A PA1A is the form used in cases where they did not leave a will behind. If there is a will you will have to give this and the person’s death certificate to the probate court.

If there is no will then, as described previously, you can apply for a grant of letters of administration that essentially provides the same authority as a grant of probate.

Once the probate court has received all of the required documents, if you are approved then you will be sworn in and given the grant of probate, which can take up to three months.

Step 2: Seek a valuation for the inherited property

After you know that you have the legal authority to sell an inherited home without any problems, your next move should be to seek a valuation of the house or flat.

You might be tempted to use the services of an estate agent to provide this valuation, but they could potentially inflate the projected sale price of the home in order to secure you as a customer. Instead, consider asking a surveyor qualified with the Royal Institute of Chartered Surveyors (RICS) who will likely give you a more accurate valuation ahead of a probate sale. You may find it useful to read our guide on how much a property is worth for some further information.

The valuation is also useful for understanding how much money you might be liable to pay for inheritance tax, and the valuation will be based on the worth of the property at the time of the death of the previous owner. You could be liable for any underpaid inheritance tax, which is why it’s important to get a reliable valuation to fully know your potential cost liabilities.

Step 3: Pay any inheritance tax on the home

The executor of a will must pay this tax on the property before the various designated beneficiaries in the will, and the tax must be paid within six months of the person dying. Get in touch with HM Revenue and Customs who will be able to provide you with a payment reference number that you will need to quote when paying the taxes. Some people pay from the deceased person’s bank account, or their own account, or a specially created probate account.

Step 4: Inform any relevant person about the death

Executors of wills must make an effort to inform any person who had a financial or legal relationship with the deceased person about their passing. This can include banks, power companies, local councils, insurance companies, creditors, and others.

Typically, executors will place an advertisement detailing the death in The Gazette, which is a journal of record that mostly includes notices which are required by statute. Any beneficiaries of a will seeking to claim their right to any assets will have two months to get in touch following this notice, after which the executor can proceed with selling any properties.

As detailed further in the guide below, the rest of the process typically involves the same steps as selling any other home: preparing it for sale, clearing out furniture and other items, deciding whether to renovate it ahead of listing it for sale, and then deciding on an option for how to sell.

Preparing an inherited house or flat for sale

Any time someone wants to sell their home, they will eventually have to remove all of their personal belongings. There can be an additional complication when it’s an inherited home, because there’s a very strong likelihood that the person who died will have left all their possessions behind.

Before the house or flat can be listed for sale, regardless of the method of selling, you should clear out all of the items within the property. Some of these items might have been designated for specific recipients in a will, whereas others could be sold and the proceeds distributed equally among the various people who are listed in the document. Read the terms of the will closely so that you know how to proceed with handling this step of the process.

The next stage is to decide whether you and anyone else listed as a beneficiary of the property want to invest in making any physical changes to the property, such an extension or renovation of the home. Spending money on upgrades could help to increase the overall value and related sale price of the home, but can also be costly and time-consuming.

And finally if you don’t plan on living in the property in the period between the date you inherited it and when you sell it, you need to ensure the home is adequately secured. If nobody is living in the house or flat you should still decide on a schedule to regularly check on it so that you’ll quickly know of any potential problems.

Options for selling an inherited property

If you have decided to sell your inherited house or flat instead of moving into it or renting it, you will next have to choose which method you’ll use to find a buyer. Generally your choice will come down to using an estate agent, using a property auctioneer, or using a quick home buyer.

One of the reasons why it’s a good idea to have a RICS-qualified valuer do the valuation for the property is that they can also offer some advice on the best method for selling it, possibly helping to lead you away from an option with which you would struggle to find a buyer.

Using an estate agent

Many people use estate agents to sell their home, because it can limit the amount of effort that homeowners have to exert in finding a buyer. Estate agents will craft a listing for an inherited property that includes text describing the interior and exterior along with pictures designed to show the home at its best, and then advertise this listing to generate interest from buyers who will then make a purchase offer.

Also, estate agents will typically take on the responsibility of hosting viewings through which they take potential buyers on tours of your property. But even without having to do this work, viewings can often be inconvenient and time-consuming for homeowners.

One of the biggest drawbacks of this method of selling an inherited home is the fact that there is no guarantee about when it might sell. Even though you could get an offer within days of the home being listed for sale, you may have to wait many months or more than a year before you receive a serious offer, which makes this perhaps the slowest option for selling.

Depending on where you are located and the type of inherited property that you’re trying to sell, you might also struggle to find an estate agent who knows how to sell the home. For example, if you have inherited a dilapidated property you will need to find an estate agent who has specialist experience with knowing how to sell such homes. Not all estate agents have such knowledge, which creates another hurdle to finding a buyer through this method.

Using a property auctioneer

Through this method, you’ll list the inherited home for sale and then hope that many people want to buy it so that at the auction they keep trying to outbid each other by offering ever-increasing prices for purchasing the property. Bidding starts with a minimum reserve price, which is an amount typically lower than you might want for the home but which is designed to attract more bids. Be aware that there is no guarantee of any interest from more than one person in the home, and you may have to settle for selling at the reserve price.

Also, there could be some delays associated with trying to sell the property this way. For example, after you enter the home into an auction you could potentially have to wait a number of weeks before the auction takes place. And there may be further delays of a month or longer after a successful auction until all of the mandatory legal paperwork is completed.

However, you’ll have to pay the auctioneer fees for doing all of this work, and as the non-profit consumer advocacy organisation Which? notes, these costs can range from a few hundred pounds to several thousand pounds or more. Yet in certain instances you might be able to have the winning top bidder pay these expenses instead.

Using a quick home buyer

A third option for selling your inherited house or flat is using a quick home buyer such as LDN Properties. Launched in 2003, our goal is to complete the purchase of each property in a handful of weeks, which is typically much faster than the other two options listed above.

And you won’t have to worry about the uncertainty of auction bids or the potential delays of finding a buyer through an estate agent when selling the home to us. Instead, we’ll work one-on-one with you to ensure that you get the speediest sale possibly for the property.

A further benefit of selling your home using this method is that we and other reputable fast property buyers will never charge homeowners any fees for selling. That’s because we believe people should receive the full profit from the sale of their home, regardless of whether it’s a house or flat that they initially bought or whether it’s one they inherited.

Further, quick home buyers can consider making swift and competitive offers to buy a large range of houses and flats of all shapes and sizes, whether they are leasehold or freehold. Some of the many examples of different types of homes that we have bought in London include houses with major structural issues such as extensive dry rot or subsidence, flats that have sitting tenants with very long rental agreements remaining, homes where the invasive species Japanese knotweed is present in the garden, properties built with concrete or another non-standard construction material, houses located in flood zones or noisy areas, and many other additional situations.

Taxes you might have to pay with an inherited home

You could be liable for paying some taxes no matter which method you choose for selling the inherited property. As such, it’s crucial to have a complete understanding of your various potential tax liabilities from a sale before you settle on finding a buyer for the home. Inheritance tax changes are discussed in an article by This is Money.

Inheritance tax liability for inherited homes

As described earlier in this guide, it’s possible that you will have to pay inheritance tax as the result of being named as the beneficiary of a property in someone’s will.

Always check the UK government’s website for the most up-to-date information on annual main residence tax rates and be sure to seek professional advice before making decisions.

Capital gains tax for an inherited property

The UK government’s website explains that capital gains tax typically applies to any profit that you make when selling an asset that has increased in value after you first bought it. For inherited homes, the tax applies if you sell the property and someone pays more than the value of the house or flat at the time of the owner’s death. When inheriting or selling a farm, there may be other factors to consider – be sure to obtain professional tax advice.

For example, if the inherited home was worth £100,000 at the time of their death and you later sell the property for £150,000 you made a gain of £50,000 and will be taxed on that amount. Be sure to obtain professional advice in relation to capital gains tax as it is a changing and complex area of tax.

Income tax

Income tax for inherited houses or flats usually only applies in those instances where you make any money from the property. One situation this will occur is if you inherit a home and decide to rent it out. The money that you receive in monthly rental payments from your tenants will be considered income that you will have to declare on a self-reported tax form.

The precise level of income tax that you will have to pay if you’re making money from your inherited home will depend on how much total income you make in a year. We suggest you seek professional advice in relation to income tax queries.

Stamp duty when selling an inherited house

Homeowners must pay stamp duty when they buy certain types of property over a specific price threshold, but it is not currently applied to inherited properties but the beneficiary has not bought anything. However, if the will left the home to three people and one person buys the other two shares in the property then you might be liable for stamp duty in some situations. Again, we urge you to seek professional advice in all aspects of tax and stamp duty.

Tips for preventing fraud when selling an inherited house or flat

In addition to the useful information outlined above about selling an inherited property, you should also consider our advice on how to prevent fraud when selling such a home.

One simple step you can take to ease the process is registered for the property alert service offered by the Land Register. There’s nothing in the probate process that mandates estate beneficiaries or executors to sign up for this alert, but it can be a very useful tool to guard against any potential fraud that might occur because the home is inherited.

Action Fraud, the UK’s central reporting system for cybercrime and other scams, notes that fraud is possible with inherited homes, such as someone being told they have inherited a property that they have no right to and that you actually inherited. This is possible because inherited homes often don’t have a mortgage, are generally left unoccupied during the probate process, and the ownership of the home might be contested. Fraudsters use all of these aspects and others to try and pursue scam sales of inherited properties, but the Land Registry’s alert will automatically tell you when someone tries to take a major step in the home sale process such as pursuing any kind of conveyancing so that you can intervene and halt it as quickly as possible.

To further protect yourself against any possible scams when selling an inherited property, you should make sure to keep detailed, clear and accurate documents of every step in the probate process. You should also make paper and electronic copies of every document generated during the sale of the inherited home so that you have tangible proof should you need it.

Top queries about selling an inherited property

Homeowners looking to sell a house fast often ask us for further information on timescales and how to prepare a house for sale. Here are some key questions we’ve been asked about selling an inherited property: