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Sometimes in a will, you may be left some property and when suddenly faced with ownership over a new house, knowing what to do next can be tough. There are plenty of questions that need answering, especially if the passing was unexpected. So, to help you try to understand what happens next, we’ve answered some of the frequently asked questions to help make inheriting a property easier.
What are my long terms options?
Normally there are three options available once you’ve inherited a property. Whichever option you choose may completely depend on your circumstances, but each one will require different processes.
Sell the property
If you decide to sell the house, then you’ll have to go to either an estate agent or a property-buying company. Selling an inherited house is no different to selling your own; everything will be in your name so the entire process should go smoothly.
However, if there is a still a mortgage attached to the house and the will didn’t specify that it should be paid off using the deceased’s estate, then some of the money from the sale will have to go towards paying the remainder.
Move into the property
If you decide to move into the property then you will need to organise utilities and bills, like electricity and Council Tax. If the mortgage is not completely paid upon inheritance, you’ll also have to organise payments with the lender.
Rent out the property
If you want to use the property to bring in a bit of extra income, you can rent it out and become a landlord. In this scenario, if the mortgage hasn’t already been paid, you will have to apply for a buy-to-let mortgage, which any lender can help you secure.
What happens if there’s still a mortgage?
If there is still a mortgage on the house, it will need paying unless the will explicitly said it should be covered. There are a variety of ways the remaining debt can be repaid and it all depends on what you intend to do with the house.
If you sell the house, then some of the money from the sale will have to be dedicated to the mortgage. The remaining payments can also be taken on if you decide to keep the property.
For more information on what happens to the mortgage, check out our blogdedicated to this frequently asked question.
Do I have to pay any taxes?
Inheriting a house does come with taxes and you can expect to pay inheritance tax. Depending on what you do with the property once you’ve inherited it, you may find yourself faced with more taxes such as;
Income Tax – If you receive any form of income from the inherited property, then you will have to declare this for tax purposes.
Capital Gains Tax – If you decide to sell the property then this tax will be paid on any increased value since the date of death.
After the passing of a loved one, deciding what to do with an inherited property can rightfully be the last thing on your mind. Fortunately, the property doesn’t have to be dealt with right away and most banks or lenders will be sympathetic to your cause.
While there are taxes and bills that will need to be paid if you decide to keep the house, you don’t have to rush straight into paying them. Inheritance Tax doesn’t have to be paid for up to 12 months, and most mortgages will have a grace period while you make decisions.