Selling an Inherited House: A Complete Guide

Estimated reading time 21 minutes

Key Takeaways:

There are three different ways of inheriting property: Sole Beneficiary, Shared Ownership, Co-owners or Joint Tenants.
The executor(s) of the will must apply for a grant of probate before selling inherited property. This is a legal document that authorises them to distribute the estate of the deceased.
The first steps to take when selling an inherited property are to obtain a property valuation and then to calculate and pay inheritance tax.
There are a few methods you can use to sell a house you inherited. For example via a traditional estate agent or cash buyer. Choosing a cash buyer, like Gaffsy, is the best way to sell inherited property fast with no unnecessary extra expenses and the sale can often be completed in as little as seven days.
When you have sold your property, you must calculate and pay any capital gains tax within 30 days.

Understanding Inherited Property: What You Need to Know

Selling an inherited property often comes with mixed emotions. During a time of grief, and especially if your property has sentimental value, it can be a difficult and emotional time even without the responsibilities that come with it. There are lots of things to consider, the legal requirements, the financial aspects and tax implications, and understanding the process when there are multiple individuals involved or named in the will. To make things a little more digestible, we have put together a complete guide with everything you need to know about selling inherited property.

Ways of inheriting a property

There are a few ways of inheriting a property, and each scenario comes with different considerations:

Sole Beneficiary: If you are the only person inheriting a property, you have full control over its future, whether that means selling, renting, or living in it.

Shared Ownership: If you inherit property with others, decisions must be made jointly, which can complicate the process. Discussions about who pays the inheritance tax on a jointly owned property and how to handle the expenses will need to be had.

Co-owners or Joint Tenants: If you inherit a share of a property alongside co-owners, it’s important to understand your rights and responsibilities, including how to manage disagreements that may arise.

When is probate necessary and how do I obtain it?

Probate is the legal process that allows you to manage the estate of someone who has passed away. Here’s a simple overview to help you understand when probate is needed and how to get it:

What Is Probate?

Probate is usually required if the deceased person owned property or had significant assets or investments. The process involves proving the validity of the will (if there is one) and getting a ‘grant of probate’, a legal document that lets you handle the person’s estate. This document gives you the legal authority to sell their house or distribute their money. If there isn’t a will, probate is still needed to appoint an administrator to manage and distribute the estate according to the law.

How to Obtain Probate? 

To get probate, you need to apply to the UK Probate Registry. Probate usually takes between 12-14 weeks to be issued, but it can take longer if there are complications. Understanding probate can get a little overwhelming, so it’s a good idea to get yourself as clued up on the process as possible.

It’s a good idea to talk to a solicitor to get a better understanding of what to expect based on your specific situation or even to hire a solicitor to guide you through the process, especially if you’re unsure where to start. For more detailed steps, you can visit the GOV.UK probate page or Law Society of England and Wales.

Property Value and Tax Implications

Costs involved when inheriting a property

There are some tax implications for selling an inherited property. Before we get into that, it is important to mention that one of the first steps when selling inherited property after probate is determining its value. This is crucial not only for sale purposes but also for calculating any potential inheritance tax (IHT).

You will need to get a professional to find out the property’s market value at the time of the owner’s death. For this type of valuation, you would usually need to consult a chartered surveyor or estate agent who is accredited by recognised organisations like RICS or NAEA.

Capital gains tax considerations

If the value of the property increases between the date of inheritance and the date of sale, you may also be liable for Capital Gains Tax (CGT). If you are liable, you must make the payment within 30 days of the house sale to avoid penalties.

The capital gains tax liability is based on the difference between the property’s market value at the time of inheritance and the sale price. For example, if a property was valued at £250,000 at the time of inheritance and is sold for £300,000, capital gains tax may be due on the £50,000 gain, subject to personal tax allowances and rates.

Inheritance tax and other tax considerations

Inheritance tax is due if the estate exceeds the current threshold of £325,000 for individuals, although this can vary. If you inherit property from your spouse or civil partner, there is typically no inheritance tax due, thanks to the spousal exemption. If the deceased does not use the entirety of their £325,000 threshold, the unused portion can be transferred to the surviving spouse or civil partner. The threshold increases to £500,000 if the property is inherited by children (including adopted, foster or stepchildren) or grandchildren.

The standard inheritance tax rate is 40%, and it’s only charged to the remaining value above the threshold. You can talk to a tax expert or visit the GOV.UK website to find out more about the rules and exemptions surrounding inheritance tax.

Key Considerations When Selling an Inherited Property

Selling an inherited property involves more than just putting it on the market. There are several legal, financial and practical considerations to keep in mind, and documents required for selling inherited property.

Transferring ownership

Before selling, the property’s ownership must be transferred to the beneficiaries. This process is known as the ‘Assent’ and it involves registering the property in the new owner’s name(s) with the Land Registry. A solicitor can help you with this step as they will be able to ensure it’s handled correctly.

Legal processes involved

The legal process of selling an inherited house can be challenging. It’s important to understand the requirements, paperwork and documents involved, including:

Title Deeds and Ownership Proof. Ensure that all documents proving ownership are up to date and correctly filed.
Clearing Outstanding Mortgages. If there is an existing mortgage on a property, it must be settled or transferred to the new owner(s).
Dealing with Co-Owners: If the property is inherited by multiple people, all parties must agree on the sale terms. It might be necessary to mediate disputes or disagreements through a solicitor.

A Complete Step-by-step Guide to Selling an Inherited Property

Consult the will

The first step when selling inherited property is to find out if the deceased individual left a will. This document will outline their wishes for how their estate should be distributed and appoint the executor(s) who are responsible for the legalities and administration of the task. If there is no will, an administrator will be appointed and they will be required to follow ‘intestacy rules’ to establish who is eligible to inherit from the estate.

Apply for probate

Executors should apply for a document called ‘a grant of probate’ which gives them legal authority to deal with a deceased person’s estate. It is advisory to consult wills and probate solicitors or lawyers to assist with the administration of the estate.

Pay inheritance tax

Inheritance tax is due 6 months after the individual’s death. As we have discussed earlier, you will need to carefully calculate the inheritance tax that you need to pay if the value of the deceased estate exceeds the threshold, or if the exemptions don’t apply. You can do this by using the online HMRC calculator or talking this through with an accountant.

Prepare for property sale

In preparation for selling your inherited property, there are a few factors to consider. Consulting a selling your home checklist is a useful way to organise your preparations and ensure nothing goes amiss. Decluttering, deep cleaning, and perhaps making minor repairs or renovations to improve the property’s appeal are some good starting points.

Sell the property either via a local estate agent, auction or house-buying company:

Decide whether to sell the property privately, through an estate agent or to a cash buyer like Gaffsy. Each option has its pros and cons, such as speed of sale, fees, and potential sale price.

Pay capital gains tax

It is so important to pay any capital gains tax in a timely fashion. HMRC now insists on declaring any CGT tax returns within just 30 days of a property sale and will charge interest or even issue a penalty notice if this deadline is not met. Unfortunately, taxes on inherited property aren’t always history even when the sale is completed.

Selling Options for Inherited Property

Selling through an estate agent

Pros: Estate agents have local market knowledge and will organise and help with marketing, viewings and negotiations when selling an inherited property. They can also potentially achieve a higher sale price due to their network of buyers.

Cons: The process can take a long time, often several months and after all the months of waiting a sale can fall through from the buyer’s lack of secure funding, gazundering and chain-breaks.

Private sale

Pros: Selling privately can save on estate agent fees and give you more control over selling an inherited house.

Cons: This method requires more effort in terms of marketing and negotiating, it may take longer to find a buyer and there are still lots of reasons why the sale could fall through.

Selling to a cash house buyer

Pros: Gaffsy offers a quick and straightforward way to sell inherited property fast. Without the hassle or cost of repairs, lengthy negotiations, and with no chain, the sale can often be completed in as little as 7 days. Providing certainty and speed can be especially beneficial during the probate process or with the tax implications of selling an inherited property.

Cons: While selling to a cash house buyer might result in a slightly lower sales price compared to the open market, the speed, convenience and lack of fees can make this option very appealing. For those who want to avoid the stress of a traditional sale or want to sell inherited property fast, Gaffsy offers a stress-free and efficient alternative.

Inheriting and Selling a Property: Frequently Asked Questions (FAQs)

What is the process for selling an inherited house?

Selling an inherited house includes several steps: getting probate, finding out the property’s value, paying any inheritance tax, transferring ownership, and deciding how to sell it (through an estate agent, privately, or to a cash house buyer like Gaffsy). Each step may need careful thought and advice from legal or financial experts.

Do I have to pay inheritance tax on a property I inherit?

How do I value an inherited property for probate?

A valuation is needed when selling inherited property after probate. To obtain this, you need a professional to find out its market value at the time of the owner’s death. This is usually done by a chartered surveyor or an estate agent who is accredited by recognised organisations like RICS or NAEA. Gaffsy can give you a quick cash offer, but for official probate purposes, it’s better to use a qualified professional.

What is probate, and why do I need it to sell an inherited house?

Probate is the legal process that lets you manage the estate of someone who has died, including selling inherited property. You need probate to prove you have the right to handle the estate. The GOV.UK website is useful for this, especially if there are assets like property or investments involved.

Do I have to pay Capital Gains Tax when selling an inherited property?

You might need to pay Capital Gains Tax (CGT) if the property’s value has gone up from the time you inherited it to when you sell it. Capital gains tax is calculated on the profit you make from the sale, minus any tax allowances. It’s wise to talk to a tax advisor to know what your specific obligations are.

Are there any costs involved in selling an inherited house?

Yes, selling an inherited house can come with costs, such as probate fees, solicitor fees, estate agent fees and possibly costs for repairs or staging to make the property more attractive to buyers. However, if you sell to a cash buyer like Gaffsy, there are no estate agent fees, and Gaffsy covers your legal costs.

Can I sell an inherited house if it has tenants?

Yes, you can sell an inherited house with tenants still living in it, but this might affect the sale price and interest from buyers. You could also negotiate with the tenants to leave early, possibly offering them compensation, so you can sell the house empty. Getting legal advice can help in these situations.

How long does it take to sell an inherited property?

The time it takes to sell an inherited property can vary. Selling through an estate agent or privately might take several months. Selling to a cash buyer like Gaffsy can be much faster, often completing the sale in as little as 7 days.

What are the benefits of selling an inherited property to a cash buyer?

Selling to a cash buyer like Gaffsy offers many benefits, including a quick and easy process, no need for repairs or staging, no estate agent fees, and a guaranteed sale without the risk of it falling through. This can be very helpful if you need to sell inherited property fast.

Is there stamp duty when you inherit a property?

No, there is no stamp duty to pay when you inherit a property. However, if you later buy out co-owners or purchase more shares in the property, normal stamp duty rules apply. If you sell the inherited property, stamp duty is not an issue for the sale itself.

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