Selling inherited property can be a complex and emotional process, but with the right help, it doesn't need to be overwhelming. In this guide, we'll cover the six steps involved in selling an inherited house and outline what costs may be associated with the sale.
With the right help, you'll be well on your way to successfully selling the inherited house, which is why it's always a good idea to chat with a solicitor and an experienced local estate agent for some professional guidance before you get started.
Six steps to take when selling an inherited property
- Consulting the will
If you've been appointed as an executor of an estate's will, your first step should be to consult the will and contact a solicitor. They can help you review the will and identify if any conditions may affect the sale of property in the estate.
- Applying for probate
If you are named as executor, you must apply for a grant of probate from HM Revenue & Customs (HMRC). This is the legal process that allows you to administer the estate, and your solicitor can help you with this. Please note, that there may be a fee for applying for probate.
- Paying Inheritance Tax
Before any distributions of funds from the estate can be made, inheritance tax must be paid to HMRC. Your solicitor will guide you through this process and advise you on any applicable tax rates.
- Preparing the property for sale
Before putting a house up for sale, it is important to identify if any repairs or maintenance issues need to be addressed to maximise the value of the property. To get a better understanding of how much the property is worth, ensure the property is valued before putting it on the market.
- Selling the property
Once you're ready to put the property on the market, you'll need to factor in additional costs such as estate agent fees. Some of these may be included in the agreed sale price, but it's worth knowing what your responsibilities are before starting the process. Take a look at our guide on fees when selling a property for more information.
You should also bear in mind that the property may need to be insured while it is being sold. However, your estate agent can help guide you through this process and support you with what is needed each step of the way.
- Paying Capital GainsTtax
If you make a profit from selling an inherited house, you must pay Capital Gains Tax to HMRC (this only applies if the value of your assets exceeds your annual allowance). You will need to declare any profits made and pay the relevant taxes before the sale can be completed.
Summary of costs when selling an inherited property
Here's a breakdown of the potential costs you might encounter when selling an inherited property:
- Solicitor's fees
Solicitors can help guide you through the legal complexities of dealing with inherited property. Their fees can vary, so it's worth shopping around to find the best value for your needs.
- Probate application fee
There is a cost associated with applying for probate, which allows you to lawfully administer the estate.
- Inheritance tax
This is a tax paid on the estate (including the property) of someone who's died. How much you pay will depend on the total value of the estate and the tax laws in effect at the time.
- Property maintenance and repairs
Any necessary repairs or maintenance to prepare the property for sale will be an additional cost, this will vary significantly depending on the property's condition.
- Estate agent fees
When selling the property, you'll likely need to pay fees to an estate agent. These fees are typically calculated as a percentage of the property's selling price.
- Advertising & marketing costs
Depending on how you choose to sell the property, there may be additional costs associated with advertising or marketing the sale.
- Insurance
If the property is going to be vacant while you're selling it, you'll need to maintain an appropriate level of insurance coverage.
- Capital Gains Tax
If the sale of the property results in a profit, you may be liable to pay Capital Gains Tax. This will depend on several factors, including the property's value at the time of the original owner's death and its value at the time of sale.
With the right guidance and knowledge on what to expect financially, you'll be well on your way to completing a successful sale of an inherited house with the help of your solicitor and estate agent.
Understanding the value of the inherited property before you start the selling process is vital. Book a free property valuation with Hunters today to get the selling process underway.
