Being left a property can provoke a range of emotions, including grief at the loss of a loved one, gratitude at receiving such a generous gift and worries about what to do with it. Essentially you have three main options – sell it, rent it out, or move into it. With each route, there are important considerations.
Probate
You can’t simply pick up the keys and let yourself in. The probate process will need to be completed first, which can take up to a year. This includes paying bills and inheritance tax, if applicable.
Mortgage status
While you’re waiting for probate to be finalised, get in touch with the lender if the property has a mortgage. Most lenders will suspend repayments until the estate is sorted out. Once the property is legally yours, if there is a mortgage to pay, you’ll be responsible for it even if you don’t live there. It’s also, at this point, a good idea to register yourself as the new owner with the Land Registry, although you’re not legally obliged to do this until you sell it, or unless you plan to take a mortgage out on it.
Selling
Many people choose to sell a property they inherit. However, it’s not always straightforward, especially if it’s not nearby. The best thing is to find an experienced estate agent to handle the sale, using their knowledge of the local property market.
Renting it out
While renting out a house you’ve inherited will provide extra income, think carefully about becoming a landlord. You may have to pay income tax. You’ll also have to follow relevant laws on the safety of the property, such as providing an up-to-date Energy Performance Certificate (EPC), a Gas Safety Certificate and working smoke and carbon monoxide alarms. Factor in possible renovation and ongoing maintenance costs. Also bear in mind the likelihood you’ll have to pay capital gains tax on the increase in value of a property that is not your primary residence if you decide to sell later.
Moving into the property yourself
This is often the simplest option but be aware that if there is a mortgage on the property, you’ll have to put it in your name.
Inheriting a share of a property
There are two types of joint ownership:
- Joint tenants
This means it’s split equally between the beneficiaries. If one person dies, the property will stay in the possession of the others. The last person will then be able to pass the property on to the beneficiary of their choice.
- Tenants in common
Each person has a share, but the percentage doesn’t have to be equal. The beneficiaries involved can also pass on their percentage to someone else. Sometimes, selling the property is the simplest solution, as the proceeds can be split between the beneficiaries.
Finally, inheriting a property can be complicated, so you may want to seek professional legal and/or financial advice.
