A Guide to Selling Inherited Property in the UK

Selling an inherited property can feel overwhelming, especially when you are dealing with legal responsibilities, tax implications and emotional decisions at the same time. 

While inheriting a property can be seen as a welcome gift, there’s a lot that goes with it. It’s no surprise that the majority of people who inherit a property choose to sell it.

In this guide, we’ll run through the process of how to sell an inherited property in the UK step by step, including the tax implications and obligations, and your selling options.

Key Takeaways:

• There are three ways of inheriting property: Sole Beneficiary, Shared Ownership, and Co-owners or Joint Tenants.

• To sell an inherited property, the executor(s) must apply for a grant of probate. This provides legal authority to distribute the deceased’s estate.

• The first steps when selling inherited property involve obtaining a property valuation and paying Inheritance Tax (IHT). Once sold, you must calculate and pay any Capital Gains Tax (CGT) within 60 days.

• Some sellers choose to sell their inherited property via a cash house buyer like The Property Buying Company to speed up the process, particularly if avoiding delays is a priority.

What happens when you inherit a property?

When you inherit a property, it becomes part of the deceased’s estate. The person responsible for managing the estate is known as the executor (if there is a will), or an administrator (if there is not). 

There are a few different ways of inheriting property, and each circumstance comes with its own considerations:

Before selling an inherited property, the estate must go through probate. This gives legal authority to deal with assets, including property.

For more information on applying for probate and details relating to the process, head to our Guide to Selling a House in Probate.

Step-by-step: how to sell an inherited property

Step 1: Check the will and confirm ownership

Start by reviewing the will to confirm who inherits the property and who is responsible for managing the estate. If there is no will, the estate is distributed under intestacy rules.

Step 2: Apply for probate

You will need to apply for probate to gain legal authority to sell the property. This involves valuing the estate and submitting an application to the probate registry, either online or via postal application.

Apply for probate on the UK Government website >

Step 3: Get a house valuation for probate

A formal valuation is required to determine the property’s value at the date of death. This is used to calculate Inheritance Tax, so valuations must be accurate and reflect market value.

Step 4: Pay any Inheritance Tax due

Inheritance Tax may need to be paid before probate is granted. We’ll cover the details relating to Inheritance Tax in the next section.

Step 5: Decide how you want to sell

You can choose between selling through a traditional estate agent, a property auction or a cash buyer like The Property Buying Company. The right option depends on your timeline and the condition of the property.

Step 6: Prepare the property for sale

This may include clearing belongings, making repairs and ensuring the property is presentable for buyers.

Step 7: Accept an offer and complete the sale

Once you accept an offer, the legal process of conveyancing begins. Note: completion can only take place after probate has been granted.

Step 8: Pay Capital Gains Tax (if applicable)

If the property increases in value between inheritance and sale, you may need to pay Capital Gains Tax on the profit. This is separate from Inheritance Tax and depends on your individual circumstances. We’ll cover the details relating to Capital Gains Tax in the next section.

Tax implications of selling an inherited property

Understanding tax on selling inherited property in the UK is essential to avoid unexpected costs.

Inheritance Tax (IHT) explained

There is usually no Inheritance Tax to pay if:

• The value of your estate is below the £325,000 threshold

• You leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club

Note: You may still need to report the estate’s value even if it’s below the threshold.

If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren, your threshold can increase to £500,000.

If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die.

The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.

You can talk to a tax expert or visit the UK Government website to find out more about the rules and exemptions surrounding inheritance tax.

Capital Gains Tax (CGT) on inherited property

If the value of the property increases between the date of inheritance and the date of sale, you may also be liable for Capital Gains Tax (CGT). If this is the case, you must make the payment within 60 days of the house sale to avoid penalties.

The Capital Gains Tax liability is based on the difference between the property’s market value at the time of inheritance and the sale price. 

For example, if a property was valued at £500,000 at the time of inheritance and is sold for £550,000, Capital Gains Tax may be due on the £50,000 gain, subject to personal tax allowances and rates. 

As previously mentioned, a tax expert can help explain the rules and regulations related to IHT, or you can visit the UK Government Website for more details.

Other costs involved when inheriting a property

Selling an inherited house can come with additional costs, including legal fees, estate agent fees, valuation costs, utility bills while the property is empty, maintenance and insurance fees, and possibly costs for repairs or staging to make the property more attractive to buyers.