Complete Guide To How Property Inheritance Works
- Sell as fast as 7 days
- Average sale in 91 days
- No selling or legal fees
:quality(80))
For some, property inheritance can come with a lot of emotional baggage which can be quite tiring to overcome. While, for others, it can be less emotional, as executors, they will need to work out how they can pay Inheritance Tax on the property.
For most, however, it is often seen as a gift – that can help support their future plans for retirement, downsizing or even new investment ventures. In fact, according to Zoopla, over 65% of people in the UK are expecting to inherit their parents home at some point in their lifetimes.
However, only around 1 in 10 people will actually decide to keep the inherited property as their main residence – meaning over 90% of inheritors will either choose to sell, or rent out. If you are leaning more towards the selling of your inherited property, then you’re in the right place!
Here at The Property Buying Company, we buy millions pounds worth of probate and inherited property every year, and have built our system around the conveyancing process, to the point where on the day that probate is granted, we can line up the exchange of contracts to be on the same day.
How property inheritance works
Property inheritance is such a complex process that it can take multiple people, doing multiple roles in order to get it right. So, as a beneficiary or an executor, you’re not expected to know everything there is.
But, we do think it’s important for you to at least understand the process, and how you can best alleviate house selling methods to your advantage. Which brings us to our next point; knowing the lingo! There are quite a few different terms that get thrown around which we hope will help you:
As you can see, there are two main roles within the probate process; beneficiary and executor. Both of which are equally important, but have varying levels of involvement in the actual sale of assets.
For example, an executor will wait for probate to be granted before distributing it to the beneficiary. But, Inheritance Tax or other outstanding debts need to be paid before the estate can be settled, the property within the estate may need to be sold – which the executor will handle. Whereas, the beneficiary can only sell the property once it has been released to them.
Here is a brief overview of how a probate property will most likely pass through the probate process (if you want more detail - we have more indepth guides):
:quality(50))
:quality(50))
:quality(50))
How easy is probate?
Probate isn’t an easy process. Although solicitors and conveyancers do deal with it on a daily process, most executors of an estate are ‘civilians’, and will never have been through the process before. And, that’s without taking into account all the issues that can occur during the process – including waiting for probate to be granted.
According to Gov UK, in 2022, there were 234,711 applications for probate grants, with 12,891 of these applications not being approved. By late 2023, the average wait time for a probate grant had risen to 14 weeks – an increase of 6 weeks from the previous quarter.
Things haven’t much improved since then, with the average probate being granted in 2 months without issue, or almost 5 months with issues.
:quality(80))
Paying tax when you inherit
When you inherit a property, the asset will have already been through the probate process, so any Inheritance Tax should have already been paid by the executor(s). In some cases, HMRC will allow a house to be sold before Inheritance Tax is paid - but this is rare.
This tax is usually paid on an estate worth over £325,000. Only 6% of cases need to pay Inheritance Tax because most estates fall beneath the threshold. But, in 2022/23, this equated to over 41,000 people - which was the highest number in over two decades.
This is mainly down to two reasons; rising house prices & a frozen Inheritance Tax threshold which did not keep in pace with the rising house values.
Inheritance Tax is sadly not the only thing you need to worry about:
Capital Gains Tax (CGT):
If you later sell the inherited property for more than its value at the time of inheritance, you might need to pay Capital Gains Tax on the profit. This doesn’t apply if you keep the property or it’s your main home.
Stamp Duty Land Tax (SDLT):
Normally, there’s no Stamp Duty when you inherit property, but you may need to pay it if you later purchase the remaining share of an inherited property or buy out other inheritors.
We’re honoured to have been featured in the media by several leading outlets and major publications
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100)){kind=spacer}
Your sales process & options
Back in the day, selling an inherited property meant you would need to list it with an estate agent or sell through a house auction. However, in the past decade, there has been a massive increase in people choosing to sell their inherited homes via cash buyers – in fact, over 12% of the £186 million worth of property we’ve bought over the past five years, has been probate & inherited property.
From the homeowners that chose to sell with us, we discovered that their main reason for selling was the need to just move on. By the time an executor or beneficiary gets to the point of needing to sell, their house may have been in the probate process for up to 12 months!
This, paired with the fact that selling on the market currently takes around 185 days (6 months), while ours only takes around 3 months (on average), you can see why we have the advantage.
We aren’t going to lie, selling to The Property Buying Company will mean you take a slight hit on the overall selling price, but you will get the cash funds released to your bank within 48 hours of completion, in a fraction of the time it takes to sell on the ‘open’ market.
:quality(100))
