Dealing with property and legal issues is the last thing anyone wants to do after the death of a loved one. But it’s something that has to be done eventually. Property inheritance, in particular, is often a complex issue to deal with, so it’s essential to know how to approach it from the outset.
If you’re facing the complicated issue of property inheritance, you need answers to a few crucial questions.
There isn’t a will. What do I do?
If a close relative passed away without a Will, you could apply for a grant of representation, giving you access you the deceased’s financial affairs, bank accounts, and assets.
What does the law say about property inheritance?
Inheritance tax of 40% applies to estates worth over £325,000. It doesn’t apply if the deceased was your spouse or civil partner.
What should be my first steps?
The first thing to consider if inheriting a property is to check whether or not there’s an outstanding mortgage. If there is, you should be able to negotiate a brief delay in repayments giving you time to mourn and decide what you’re going to do with the property.
If you’re the estate administrator or the executor of the Will, you’ll need to declare the estate’s total value to HMRC within a year of the deceased’s passing.
If the property is standing empty, you should buy unoccupied insurance to cover damage to the property, vandalism, and theft. The terms of your policy may require you to check homes condition home every week or so.
What can I do with my inherited property?
If moving into the inherited property, nothing stops you from moving in immediately after probate is complete. But you’ll need to take on the mortgage repayments, and you’ll be liable for any debts attached to the property.
Sell the property
You may already own your own home, therefore owning a second may not be appealing. On the other hand, you may not want to take on mortgage repayments. Or you might want to avoid maintaining and renting out the property. Whatever your reasons are, you might want to sell as quickly as possible.
If you’re in a hurry to raise funds or move on, selling to a national home buyer might be the best option as they purchase property quickly but at a discount, usually 75/85% of its market value. And because there’s no property chain or negotiations involved, you could have the proceeds in your bank account within a month.
If the inherited property increases in value between the owner’s death and the completion date, you may be liable for capital gains tax.
Let the property
You have the option of letting your property for an additional income. But you’ll have to maintain the home and satisfy all the legal requirements of landlords in the UK, which might not be something you want to take on at this stressful time in your life.
And if you let your property, you’ll need to declare the income for tax purposes.
Property inheritance is difficult to manage, as it only ever occurs when a loved one passes away. Decide what you want to do with the home, and get the necessary advice from professionals as soon as possible.