Inheriting a home gives you a lot of choices, but knowing the best route to take during an emotional time can be difficult. You will have many questions, so here are some answers that will help you explore your options.
What is the probate process when you inherit property?
If you inherit a home in a will, you are a beneficiary. Probate is sometimes a lengthy process that grants the executor of a will the legal authority to manage an estate's finances, including paying taxes and settling debts, before distributing assets, such as property, to beneficiaries. Typically, an executor of a will is a friend, relative, or solicitor.
What if you inherit a home with a mortgage?
It’s important to communicate with the mortgage provider used to purchase the property because you will be responsible for mortgage payments.
You may be able to stop making mortgage payments until after probate, although interest will still be charged. You will not legally own the property until probate is complete.
If the mortgage can’t be settled by funds in the estate, such as savings or a life insurance policy, then you could consider transferring the mortgage to your name. To do this, you will have to go through affordability and credit checks.
Will you pay tax when you inherit a house?
Property is included in the value of an estate. You will not have to pay inheritance tax if the estate is worth less than £325,000 or if you were married or the civil partner of the deceased.
If your parents or grandparents leave you an estate up to the value of £500,000, you will pay the standard inheritance tax rate of 40% on anything above this amount.
What if you choose to live in a house you inherit?
If you choose to move into a property you inherit, ownership will be passed to you once probate is complete. It’s a good idea to register your name with the Land Registry if you are planning on mortgaging or selling the property.
If you are transferring the mortgage to your name, you can apply to the existing or a new mortgage provider. Doing this may also give you the option to remortgage, by releasing equity, so you can make home improvements if the property is in need of modernisation.
What should you do if you want to let the house you inherit?
A good place to start is by booking a rental valuation to see how much rent you could achieve for your property. Letting will offer a secondary income while retaining the value of the property.
If you have little experience in letting property, your helpful agent can take care of everything. From maintenance to referencing tenants and rent collection with a fully managed letting service.
What if you want to sell the house you inherit?
This is a popular choice for many who inherit property. Arranging a valuation will help you decide.
Your helpful Parkers agent will be able to advise you on how to prepare your property for sale. The quicker you sell up, the less capital gains tax you will pay as the value of the property increases over time.