If you sell the property you could have to pay capital gains tax. If the combined value of the deceased’s estate (including the property, savings, shares and other assets) is more than £325,000 then inheritance tax will be due. Various taxes could be due on the property you’ve been left in a will.
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We’d recommend speaking to a fee free mortgage brokerto work out the best option for your circumstances.Īlternatively you could sell the property in order to pay off the mortgage.Īward-winning brokers L&C can help you find a mortgage Tax due on an inherited property This could raise problems as you may already have a mortgage on your home and will have to pass affordability tests for a new mortgage. If it still has a mortgage outstanding on it, you will need to speak to the lender about getting a mortgage in your name. Once the executors of the will have settled debts and taxes then the property will become yours. If the deceased had other assets and cash then the mortgage is usually viewed as a debt that needs to be settled out of the estate before the property is passed on. But interest may well continue to build during that period. Usually payments are frozen until probate is sorted out. Check the terms of the mortgage for any details about what happens in the event of the death of the mortgage holder. If the mortgage wasn’t covered by a life insurance policy you need to find out what the lender expects from you. In some cases the deceased may have had life insurance that can be used to clear the mortgage. When you inherit a property with a mortgage you face the added complication of sorting out the mortgage. Read our guide Probate Explained for more advice and help with probate.
You will also be responsible for settling any debts and paying tax. You will then be able to access their funds to pay for their funeral and to arrange for their assets to be sold or passed on to beneficiaries. If the person died without a will, or a spouse, then you will need to apply for a ‘grant of representation’ to access their bank account. Lenders are generally sympathetic and most mortgages have a grace period when repayments are suspended while the estate is sorted out. If the property has a mortgage, it is a good idea to get in touch with the lender and explain the situation. This can be a lengthy process taking several months.ĭuring this time, you can do very little with the property you have inherited as it isn’t technically yours until probate is complete.
They are responsible for paying any taxes, clearing debts and distributing the estate. This could be a solicitor, relative or friend. If the deceased had a will then it will have named executors. How probate affects an inherited property It can take up to a year for probate to be completed. Probate is the process where the executors of the will settle debts and sort out the deceased’s affairs before handing assets over to the beneficiaries. This is because you can’t do anything with a property until probate is complete. If you have just inherited a property, in most cases you won’t have to make any immediate decisions regarding your inheritance. You may now be facing decisions about your beloved family home, or a property a long way from where you live.Īccording to research by bridging lender Market Financial Solutions in September 2017, 36 per cent of us are set to inherit a property, which it estimated was equivalent to 18.6m people in the UK. Inheriting a property is likely to be an emotional time.
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