Losing someone close to you is never easy and often, the bureaucracy around sorting out the estate and selling property only adds to the grief.
In instances where beneficiaries do not want to take on the inherited property themselves, a grant of probate will need to be applied for in most cases to sell the property on.
While this might seem daunting at first and just another roll of red tape to cut through, you’ll be reassured to know that one in 10 properties sold in the UK are reportedly probate sales, meaning it’s far more common than perhaps initially thought.
In this short guide, we outline the steps you can expect to go through if you ever need to sell an inherited property.
What is probate and how long does it take?
Probate is the legal process of distributing someone’s wealth and belongings after they pass away. Even when there isn’t a will (potentially 57% of the time), a grant of probate will still be required to transfer or sell a property, except when the property is left to a spouse or partner who is a joint owner.
How long probate takes can vary hugely and ranges from weeks, to months and even over a year. It will largely depend on the circumstances and whether inheritance tax is involved. The UK Care Guide suggests allowing six to 12 months – and this is before you are able to officially sell the property.
What can I do with the property in the meantime?
If the property is empty while awaiting the grant of probate, there are certain things you can do to prepare for the sale, provided you have the rights to access the property and administer the estate. This is often the executors or next of kin where there is no will:
– Ensure the house is secure
– Notify all service and utility providers that the owner has died and that the property is empty – gas, electricity, insurance and council tax, for example
– Clear the house of debris and rubbish and ensure it’s fit for viewing
– Remove personal possessions and valuable items but be careful not to sell items that may have been gifted in the will or without obtaining proof of sale as this will contribute to the overall value of the Estate
– Get a professional property valuation from at least two or three estate agents as soon after the death as you can
– Calculate and put aside any Inheritance Tax that is likely to be due
Will the property be used to pay off debt?
The property forms part of the total value of the estate, so if all other monies had been used and there was still outstanding debt, equity in the property may have to be used to clear it.
If you’re planning on selling the property anyway, you could inherit the proceeds from the sale minus any outstanding debt, including the mortgage – unless this is paid off by life insurance. If you intend on retaining the property, either to live in or rent out, you may have to mortgage the property yourself to release equity to pay off the estate’s debt.
Will I have to pay Capital Gains Tax?
That depends. Capital Gains Tax is payable on any increase in value of an inherited property from the date at which you acquired it to the date of sale, but only when it exceeds £12,300. So, if the property does not increase in value by more than £12,300 from the time probate is granted to the time you sell, then it’s unlikely you’ll need to pay. If, however, you decide to keep hold of the property and sell it years later, you may have to pay 18% above your allowance, or 28% if you’re a higher rate tax payer.
What’s the best way to sell a probate property and how much will it cost?
You can sell a probate property in the usual way via an estate agent and expect to pay the same fees. You can even market it prior to the grant of probate being approved, provided potential buyers are aware of the circumstances and uncertain completion time frame – potentially months.
This is often a good choice for properties in a good state of repair, but if the property has been neglected over the years and you’re not willing to make improvements, then selling at auction or to a cash buyer are fast and alternative options.