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What You Need to Know About Selling an Inherited Property

By Anthony Irving  //  Mon 15th August 2022
A death in the family and selling a house are both up there with the most stressful life events you can experience. So, it's no surprise that selling a house you've inherited in Central London - possibly the family home you grew up in - can be emotionally draining.
Selling Inherited Property

While selling an inherited property is much like any other house sale, additional legal aspects need to be considered. We look at what you need to know before your property goes on the market, from wills and probate to inheritance tax.

1. Read the will

If the person who has died left a will, it will lay out the name of the executor (the person in charge of making sure the last wishes are carried out) and the beneficiaries (the people who will benefit from the estate). If the property has been left to more than one person, for example, you and your siblings, deciding whether to sell could be less straightforward.

2. Apply for probate

After someone has died, the first step in organising their estate is to apply for a grant of probate from the Probate Registry. If the person left a will, the executor needs to make the application. If they didn't, their spouse, civil partner or adult child can apply to administer the estate and apply for probate. There is advice about how to do this on the government website.

Once probate has been granted, the executor has the legal authority to act on behalf of the deceased and get access to bank accounts, investments, and property so it can be distributed among beneficiaries. The probate process usually takes six to eight weeks before it is granted.

3. Get A House Valuation For Probate

As part of the probate process, you will need to report to HMRC how much inheritance tax you will be liable for, based on the total value of the ‘estate’ of the person who has died.

As part of this, you will need to obtain a property valuation and it is advised that this is obtained from a professional (unless the gross value of the whole estate is less than £250,000).

An estate agent in central London can offer a free informal valuation for you, but they may not be best placed to value a property with structural complexities or a property that is run-down, for example. Make sure that you inform the agent that you are obtaining the valuation for probate, so they don’t inflate their valuation to give you an asking price rather than an open market valuation.

Alternatively, you could use a RICS (or equivalent) surveyor. These may carry more weight with HMRC as they provide you with a formal document. If you are investigated by HMRC and required to go to court regarding inheritance tax payments, then having a formal valuation from a RICS surveyor will make your life much easier. It is advised that you go down this route for higher-value properties or those with added complexities. Of course, the obvious disadvantage to this is the cost of hiring a surveyor.

4. The mortgage status

Often mortgages and loans have already been paid off with inherited property, but this is not always the case. If you have been left a property with an outstanding mortgage, the monthly payments will continue to fall due. Get in touch with the lender, and most will set up a payment holiday for you whilst probate is going through. Once the property is legally yours, you will be responsible for the mortgage payments.

5. Selling the property

If you inherit a house and want to sell it, you may need to empty the property of its contents. Although you may want to retain some of the furniture to help the property look more attractive to buyers. You can hire professional house clearance companies to help you.

If the property looks dated, you could consider redecorating and replacing carpets to make it more appealing to potential buyers. Just be careful how much you spend – too much, and you may not recoup your costs. Local estate agents will be able to value your property and suggest how much renovations could add.

Once your property is up for sale, the process is the same as selling any other home, although you may have to pay added taxes on the proceeds of the property sold – see below.

6. Pay Inheritance Tax

Inheritance tax, at a rate of 40%, must be paid on estates over the tax-free threshold of £325,000 - this threshold increases to £500,000 if you are inheriting property from your parents or grandparents. There is no inheritance tax to pay if left to a spouse or civil partner.

More information about how inheritance tax works and any relief or exemptions can be found on the Government website.

The executor of the will is responsible for paying inheritance tax. They can use the funds from the estate to make this payment. Inheritance tax is due by the end of the sixth month after the person died. For property, it is possible to pay in instalments until the home is sold.

7. Pay Capital Gains Tax

If the property has increased in value since you inherited it, you will have to pay capital gains tax (CGT) on the profit. If you are in the basic tax band, you will pay 18% CGT on any profits from your sale. If you are in the higher tax band, you will pay 28%.

Everyone has an annual CGT personal allowance, for the tax year 2021/22 the tax-free amount is £12,300. Only gains above this amount are taxed.

If you moved into the property and lived in it as your main residence, capital gains tax won't be payable when you sell. You can also reduce the capital gains tax owed by selling quickly after inheriting a property.

Frequently asked questions

How long does it take to sell an inherited property?

You won't be able to sell the property until the probate process is completed unless your name is already on the deeds – for example, if you're the deceased person's spouse. This process may take anywhere from eight weeks to a year. It's not uncommon to put the property on the market whilst waiting for the probate to be finalised, to allow for a quick sale once completed.

Are the services of a solicitor needed to sell an inherited property?

You can apply for probate yourself using an online form on the government website, or you can get a solicitor to act on your behalf. While the process is simple, using a solicitor can minimise your paperwork and help you avoid the pitfalls of dealing with family members.

Do I have to pay income tax on inherited property?

You will only need to pay income tax if you inherit a property and earn rental income from it.

Do I have to pay stamp duty on an inherited property?

You do not have to pay stamp duty when you inherit a property, but you may have to pay inheritance tax (see above).

How much does it cost to sell an inherited property?

If you decide to sell a property you have inherited, there are other costs to consider besides the inheritance tax and capital gains tax.

  • If you apply for probate yourself, the application fee is £273. If you use a solicitor, their fees are calculated based on the estate's value – typically between 2% and 5%.
  • You may also choose to spend some money sprucing up the property before putting it on the market.
  • Once the property is legally yours, you will need to cover mortgage payments, insurance, council tax and utility bills whilst the property is empty.
  • Like a normal house sale, you will also need to pay estate agent fees and conveyancing fees.

We can help

If you have inherited a property in central London and are considering selling it, talk to one of our friendly team. We can help you value the property and offer advice on renovations that could increase the property price. Get in touch today.  

Offices at

Marble Arch
29 Edgware Road
London
W2 2JE
f: 020-7258-3090
Knightsbridge
34 Beauchamp Place
London
SW3 1NU
f: 020-7581-7005