Selling an inherited property? We Buy Inherited Property Fast.

Selling an inherited property? We Buy Inherited Property Fast.

Selling an inherited property can be a stressful and even traumatic experience.  Often beneficiaries and executors who find themselves in this situation for the very first time will struggle with the whole process.

Our guide simplifies the process of selling an inherited property.  We recognise that selling a property takes organising and often under stressful circumstances with a loss of loved one, it can be overwhelming.  There are a number of formalities that make this process tricky.  If you are not careful, it can cost you thousands of pounds in professional fees by probate solicitors and estate agents.

The good news is that with the right guidance, you can reduce the stress of selling an inherited property.  More importantly you’ll know what to do and when.

Our guide to selling probate property includes:

  • What happens when two siblings own a property?
  • How to apply for a Grant of Probate.
  • What to do if you are due inheritance tax from sale of your inherited property?
  • Dealing with Utilities and the Council.
  • Capital Gains and Inheritance Tax.
  • How to sell your probate property?
  • Avoid these 3 mistakes – how to get thousands MORE for your inherited property.

 

What happens when two siblings own a property?

Often inheriting a house that is paid off can mean that there are a number of options available to you such as whether or not selling inherited property to sibling may be a good idea or perhaps exploring an efficient way to selling deceased estate property.  Whether you are selling inherited property to family or thinking about how to sell parents’ house after death can bring about its own challenges such as:

  • how to refinance an inherited property to buy out heirs totally
  • whether you are selling share of inherited property to another family member
  • how the proceeds of inherited property will be split between siblings
  • whether property needs renovating or updating before selling

In our experience, transfer of property between siblings can only take place if one sibling (the one who is buying deceased estate property) has financial means to buy out the other sibling.  Often banks are reluctant on lend on deceased estate because they believe properties require some sort of attention in most cases.  The sibling who is beneficiary can force the sale of inherited property if they are an Executor or if they believe that property is taking forever to sell.

Selling estate property to family can lead to frustrations, and disputes between siblings particularly if they need the money now.  With uncertainty in housing market, holding period of inherited property can vary depending on price, condition and local area – and this isn’t ideal when probate estate bills are mounting up.  Inheriting a house with a mortgage means additional interest is added with extra charges for late or delayed payments that can reduce the amount of inheritance pot amongst beneficiaries.

Often you can have a brother or sister living in inherited house which makes it impossible for a traditional buyer expecting a vacant possession.  This is not an issue for true cash buyers.

 

How to apply for a grant of probate?

Before diving deep, let us take a look at what probate is according to Oxford Living Dictionaries:

“A verified copy of a Will with a certificate as handed to the Executors.”

‘She has been granted a probate to execute her late father’s estate’

Probate is essentially the process of applying for the right to deal with a loved’ one estate after they have passed away.  Their estate may include property, car, bank accounts, jewellery or collectables such as art.  You can only apply for a grant of probate to sell an inherited property if you are named as the Executor on the Will.

An Executor can apply for a grant of probate from the probate registry.  You can find your nearest probate register office here.  Once you have obtained the grant of probate, it proves that as an Executor, you have authority to deal with the deceased person’s estate, allowing the Executor access to their bank account and to share out any assets or money amongst the beneficiaries.

Should there be more than one Executor on the Will, the probate application form and guidance notes will explain in detail what to do.

If no Will was left, a relative or close friend can still apply to the probate registry office. However, in this case, they will apply for ‘a grant of letter of administration’. If this is granted, they will be referred as ‘Administrators’ and have the same authority as an Executor.

Applying for Probate is not necessary in the following circumstances:

  • If you already owned a share of the property with the deceased i.e. a married couple and therefore, because you are joint owners when one owner passes away, it automatically transfers to the other party.  Learn more about tenants in common.
  • You have a joint bank account or a savings account. The bank will only need to see the death certificate to transfer the funds to you.  A grant of probate may still be needed if there are substantial funds or assets held in bank accounts or for life insurance pay-out.

Applying for probate

You can apply for grant of probate yourself or if you prefer to appoint a solicitor.  Before you post any forms, you will need to establish assets and liabilities left by the deceased.  This means adding up value of property, bank accounts, investments and personal possessions.  You’ll also need to tally up any loans, credit cards and mortgages that are outstanding.

You can apply for probate either by yourself or through a solicitor, if you prefer. Before you send off any forms though, there are certain things you need to check first.

Now that you have got that all wrapped up, you will need to officially apply for grant of probate.  You can do this by:

  • Completing a probate application form

For this you just fill in the PA1 form or you can call the Probate and Inheritance Tax helpline.

  • Completing an inheritance tax form

You will need to establish what the estate is worth.  Then based on the value of estate, you may need to pay inheritance tax. But even if there is no tax to pay you will still need to fill out an inheritance tax form.

  • And finally posting your completed application

Once all forms are completed, you will need to send your application to the probate registry office ideally as a recorded delivery.  Your documents will need to include:

  1. Probate application form PA1
  2. Inheritance Tax form
  3. The death certificate
  4. The original Will and 3 copies – and any amendments to it
  5. The application fee of £215.  There is no fee if the estate worth less than £5,000.
  • Swear an Oath

You will be sent an Oath by the Probate Office.  This Oath can only be witnessed by either a commissioner for Oaths such as a solicitor or your local Probate Office.  There is a normally charge for this.

This oath is a legally binding document and you will promise that all the information you have provided is the absolute truth.

How much is inheritance tax in UK from 2018 onwards?

From April 2017, the inheritance tax allowance has been raised from £325,000 to £500,000 therefore, selling an inherited property has very little tax consequences as long as entire estate (all of deceased’s belongings) is valued at under half a million pounds.  In order to fully understand tax implications of inheriting a house you must speak to your qualified accountant who will be best to advice you based on your circumstances.

 

How do you avoid inheritance tax?

If you inherit a house you do have to pay taxes – thankfully the inheritance tax only kicks in if estate is worth more than £500,000.  There are a number of inheritance property tax avoidance schemes which cover how claim loss on sale of inherited property for tax purposes and declaring a loss on sale of inherited property to related party.

Any type of tax dodging is considered a criminal offence.  It is best not get involved in any inheritance property tax avoidance because HMRC are known for seizing assets and putting tax dodgers behind bars.

HMRC use sophisticated data to validate whether the sale of inherited property at a loss actually took place.  On what basis can an inherited property be sold at a loss?

The answer is only under exceptionally rare circumstances.  In this situation, you’d have to ask your accountant on how to report sale of inherited property on tax return and ask whether the loss on the sale of an inherited residence deductible against your taxable income?

 

Do I pay capital gains tax when I sell an inherited property?

Capital gains tax rate on inherited property is only payable if property is sold during probate and its value has gone up since the person died then capital gains tax on inherited property sold is payable.  This tax is calculated on how much the increase is since the deceased’s death because beneficiaries inherited the asset at their probate value.

 

How to avoid paying capital gains tax on inherited property?

Avoiding paying capital gains tax on inherited property can land you in jail.

 

How to sell your probate property?

First you need to establish that you are a rightful heir to the estate of the deceased.  Even if your name is mentioned in the Will as someone who has inherited the property, you will still need to apply for a grant of probate in order to allow you to legally sell the property.  A grant of probate will only be issued to the Executor of the estate.

If you are a beneficiary then you are someone who has been issued with a share of proceeds from the sale of the property.  This is much more simply affair than being an Executor.  In some cases, a solicitor can act as an Executor.

In almost all of cases, the longer a sale of an inherited property drags on, the more bills are piled up such as property insurance, utility bills, maintenance and keeping an eye on the property, solicitors’ fee as they are on hourly rate and so on.  Many of these costs are avoidable and therefore, you can get more money in your pocket faster, as you will soon learn.

Dealing with Utilities and the Council.

When you are trying to sell your inherited property there are a number of out of pocket expenses you will incur.  These will need to be paid regularly typically monthly via Direct Debit:

  • Ongoing standing charges for gas, electricity and water until the property is sold.
  • Council tax bill or court action if council tax bill remains unpaid.  Be careful some councils charge as much 200% council tax because the property is empty.  Contact us and we can help.
  • A house that is empty for more than 30 days will not be insured.  You will need to buy a full perils empty house insurance that can run into thousands of pounds in each year.  Often insurers will not renew empty property cover once it has been 12 months because empty property cover is seen as temporary insurance cover.

 

Capital Gains and Inheritance Tax

What is the key difference between Capital Gains Tax and Inheritance Tax?

You will need to pay inheritance tax on deceased’s estate if it is worth more than £500,000. You will need to pay this if you are the Executor or the Administrator of the Will.  You will need grant of probate or letter of administration.  You can use funds from the estate to pay the inheritance tax. You will have 6 months after the person has died to pay the tax.  You may wish to read on about how to sell your inherited property quickly below.

At the time of writing, the rate of inheritance tax is 40% on anything above the threshold of £500,000. This can be reduced to 36% if 10% or more of the estate is donated to charity.

Whereas, Capital Gains tax is the tax on the profit you make from the sale of the assets you have acquired.  So say you have inherited a property and it is valued at £300,000, you have decided to keep it and 10 years later, it is worth say £600,000 then you will pay tax on £300,000 gains at point of sale.

Property Saviour
Property Saviour

Property Saviour are experts in buying your property fast ethically. We will buy your property, guaranteed. Our service is free and we never charge any fees. We contribute an extra £500 towards your conveyancing fees. Whether you have inherited a property, it is an investment, or the property is in negative equity, we can help. Get in touch with us today on 0113 320 6700.

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