The world of property doesn’t just concern buying and selling, it also includes inheritance. According to bridging lenders Market Financial Solutions, as of 2017 statistics showed that 36% of UK citizens were set to inherit a property throughout their lifetime, which equivalates to 18.6 million people. Although it’s a situation a lot of us hear about, how many of us would know what to do if we were faced with inheriting a property? Most of the time, it’s an unpleasant situation, however it’s a possibility that many of us face and it can massively affect your finances and require you to make a lot of ultimate decisions. There are a lot of financial and emotional decisions to make once you inherit a property, so, here at We Buy Any House we have compiled a guide on what to do if you inherit a property.
Step One- Finding the Will:
Once you have found out you’re going to inherit a property, the first thing you need to do is find the will. This is necessary as you will need to establish your legal relationship with the people who owned the property. After you find the will, you will understand where you stand in terms of the property. A few positions you may find yourself in could be:
- Named beneficiary. This means you have the overall legal rights to the property once it’s been administered.
- Executor. This means you have the responsibility of sorting out the property of the person who’s died.
- Next of Kin. This means that you legally have the right to the property if your spouse has left no will.
Probate:
Going through probate is essentially the legal process in which the affairs of the deceased will be sorted out by the executors. Throughout this stage, any money or property owned by the deceased will be distributed according to the will- however this will only be done once any outstanding taxes and bills have been paid. This will give you time to decide what you want to do with the inherited property.
Inheriting Property with a Mortgage:
Inheriting a property that has a mortgage can cause even more complications in the process. However, in some cases, the mortgage can be cleared if the person who has passed had life insurance. Failing to provide life insurance to cover the properties mortgage, then you may need to gain expert help to find out what happens to their specific mortgage in the event of a passing.
Tax:
If you’ve been left a property in the deceased’s will, then you may be liable for various taxes. These include:
Inheritance Tax:
Depending on the value of the property, you may need to pay inheritance tax. This only occurs if the property is valued at more than £325,000. If this is the case, then 40% of everything that exceeds that amount will go to the taxman. However, there are circumstances where this isn’t always the rule, such as if you have inherited the property from a direct descendant, or between spouses.
Capital Gains Tax:
For the basic income taxpayer, capital gains tax on a residential property is levied at 18%. However, if you are an additional rate taxpayer, then this may rise to 28%, but everybody has a capital gains tax allowance of £12,000.
What Happens if I Want to Keep the Property?
If you want to keep the property you have inherited, then it’s important to establish ownership. Once this has happened, any existing mortgage will be transferred into your name, either by setting up a new mortgage arrangement or continuing with the same lender. You will have to pass the usual credit and affordability checks. However, if you own the property, you can move in outright and get settled in.
What Happens if I Want to Sell the Property?
If you want to sell your house, this may be slightly more challenging. Not only do you have to be concerned with things such as distance and whether the property needs updating, but also you will have to deal with things such as decluttering and emptying the house. Once this is done, you can get advice as to how much the property is worth, and then put it up for sale in the exact same way you would your own home. However, you may need to pay inheritance or capital gains tax on the proceeds.
This article was written by a quick house sale company We Buy Any House. If you’re wondering “how can I sell my house fast?”, head to the We Buy Any House Reviews page for more information relating to all property related enquiries.
