Understandably inheriting a property can be a difficult time. Whether you should keep it, rent it or sell it, the decision is yours. Before making a decision it is important to do your research and learn the ins and outs of everything from tax to renting and selling.
Don’t Make A Rash Decision
When first inheriting a property, normally, you won’t have to make any rash decisions as you can not do anything with the property until the probate is complete. Before you can sell an inherited property you have to establish your relationship with the property and therefore you may be required to apply for probate, which is the legal process that happens after someone dies.
When probate is complete and you are deciding what decision to make in regards to your inherited property it is important to keep in mind the potential routes available and which option will suit you better than the other.
Selling Inherited Property
Before selling your property it is important to have an overview and make a decision whether certain areas or the full property may need to be renovated, not only will this give the property a higher chance of selling quicker but if the property is in good condition you are more likely to sell it at a more reasonable price than if work was required. With the current market usually more inclined to buy a property that has been modernised, this may be something you want to keep in mind.
Although if you are wanting the property to be sold fast and the property requires renovation and you are not in the position to do so then it is always an option to sell to an investor or a builder, who will then look to take the property off your hands. This usually may be for a cheaper price than if you were to sell your property on the market but it will enable you to sell your property a lot faster.
If you are looking to sell an inherited property, at Horizon Sales & lettings we pride ourselves in fast sales and purchases in Teesside and the surrounding areas. We also always use advanced technologies wherever possible to ensure optimum business efficiencies.
Renting your Inherited Property
When inheriting a property you also have the option to rent the property out, giving you the added benefit of another form of income. Although this may sound like a risk-free option, being a landlord is often known to be a full-time job and therefore if you are not in the position to have the responsibility of the property this decision may not be for you.
At Horizon Sales & Lettings we offer a full management service across the Teesside area and our three lettings directors are all landlords with mixed property portfolios so fully understand what service a landlord will want from start to finish.
Taxes
When you inherit a property there are various taxes that could be due on the property.
Inheritance Tax - When the combined value of the deceased estate (including property, savings and other assets) is more than £325,000 then you will be required to pay inheritance tax.
Income Tax - If you inherit a buy to let property or a holiday let you will be required to pay income tax when you start to receive income from the rent.
Capital Gains Tax - If you choose to sell the property you may have to pay capital gains tax. For 2020/21 the tax rates are 10% for your entire capital gain if your overall annual income is below £50,000 and 20% of your entire capital gain if your overall annual income is above £50,000.
Things To Keep In Mind
If you are a first-time buyer it is important to know that when you inherit a property you become a homeowner and this, therefore, you no longer qualify as a first-time buyer meaning you will not benefit from a government bonus on any ‘Help to buy ISAs’ and you will not get a first-time buyer relief on stamp duty if you buy another property.
If you inherit a property with siblings it is important to make the decisions jointly between yourselves, with the straightforward decision usually being that once sold you split the money between yourselves.
Horizon Sales & Lettings
Although you may decide to rent the property out and in this case, you will need to decide who will be responsible for it and if you are going to take on the job alone of managing it. At Horizon Sales & Lettings we offer landlords several lettings options from Tenant find only to fully managed service starting at 10% ex VAT. With our aim to provide a hands-off property management service.
If you have recently inherited a property and you are unsure of what decision to make, at Horizon Sales & Lettings we have strong experience with buy to let properties; buying, selling and lettings management. Our friendly team of letting agents will ensure the process is easy and as straightforward as possible. Find out more about how we can help and get in touch with us today.
