It is a sad and unavoidable fact of life but losing a loved one is incredibly difficult and it is often made all the much harder by the confusing and time-consuming legal implications and paper work involved when we inherit property. While we strive to be of assistance, please be aware that this is not an advice guide. You should always seek professional legal advice, ideally someone who specialises in inheritance.
There are three different types of tax that you may incur when you inherit a property.
Capital Gains Tax
This is applied when selling property that has been inherited from a friend or loved one, or if the property has been exchanged or given away and it has gone up in value since the date of death.
Any inheritance tax that is due on a property is usually paid before it is released, along with any debts in the deceased’s estate.
This tax is only applied when the property generates income, including, if the property is rented out.
As you can see; in the majority of cases the only tax that is applicable is Capital Gains Tax and that is only paid on the profit that is made if you sell a house that you have inherited.
Paying Less Tax
If you would like to avoid having to pay an extortionate amount of tax then if you sell your newly acquired house fast then you avoid the house accumulating value, and therefore, extra tax. However, please remember that while you are able to market the property from the date of death, you are unable to exchange contracts or complete a house sale until the Grant of Probate (or Grant of Confirmation in Scotland) has been issued to you.
What Is Best To Do With Inherited Property
It really is your decision what you decide to do with a property once you have fully inherited it. That is, of course, the deceased’s Will declares that the property must be sold, or if there are outstanding debts to paid in the estate that can only be paid through selling the property.
Luckily for you there are numerous options to consider once you have the keys in your hand and you have the all clear to do as you please with the property.
Rent The Property Out
There is the option to rent the property out if you choose to keep it as an investment for the future. You can either manage the rental yourself or hire a property management company to take of it on for you. However, it is worth remembering that as a landlord you will have certain legal obligations to meet. As detailed above, your rental income would be taxable and you will be required to complete a self-assessment tax return each year to avoid getting into trouble with the taxman!
Live in the Property
You also have the option to reside in the property and if you nominate it as your main place of residence you will not have to pay Capital Gains Tax on the profit made from selling a private residence. You will then have to transfer ownership with the Land Registry and you will then be liable for any outstanding mortgage on the property.
Sell The Property
If you wish to release equity which is tied up in the property then selling it could well be your best option. As long as the property is not sold for a value which exceeds its probate value, you will not have to pay a penny in tax! A tip which is worth considering is not to overvalue the property, ensure that it is competitively priced in comparison to other properties in the area. This should enable you to sell the house fast.
Alternatively you could avoid paying costly estate agent fees by contacting a quick house sale company like SureOffer. We guarantee that we will buy your house from you for cash and it won’t cost you a penny! To make it all the more sweeter we will also pay up to £1,000 of your legal fees!
To get your free, no-obligation cash offer and to sell your house fast, contact SureOffer!