Losing a parent can be one of the most difficult moments in our lives. The prospect of having to sort out their home and belongings can be stressful, and particularly difficult if you no longer live in the same city. It’s important that you take things at your own pace. There is no rush to do anything more quickly than you feel comfortable.
Below we outline the process to help you feel less daunted and to demystify some of the legal aspects of selling a deceased parent’s home.
‘Probate’ is the formal permission required to deal with someone’s property, money and possessions when they die. If you’re named in your parent’s will as an ‘executor’ you can apply for probate. Once this is processed you will receive what is called a ‘grant of probate’ confirming your right to arrange your parent’s assets according to their will.
If your parent did not leave a will, you can apply to become the ‘administrator’ of their estate. As the administrator you will receive a ‘letter of administration’ rather than a grant of probate, but your legal rights will be the same.
If you decide you wish to sell your parent’s home, in most cases it’s necessary to apply for probate before you complete the sale. You’re not alone. Research has found that around 1 in 10 properties on the market in the UK are probate sales.
If your parent’s property was jointly owned, it’s likely that probate is not required, because ownership will automatically pass to the other owners. There is, however, an exception: when a property is jointly owned by ‘tenants in common’. In this case, each owner holds a specific percentage share of the home. If one of the ‘tenants in common’ passes away their share will become part of their estate to be handled according to their will.
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In the UK receiving your grant of probate, or letter of administration, shouldn’t take longer than 4 weeks from application. However, there are a few things you will need to arrange before applying.
Firstly, you will need to estimate and report the value of your parent’s assets. This requires having an estate agent come to look at the property and undertake a valuation. It’s a good idea to meet with a few agents, and be clear that this valuation is for the purposes of a probate application. It’s important to ensure you receive an accurate figure because the value quoted at this point can have tax implications later on.
We can support you in finding the best estate agent to value the property. One of the greatest assets an estate agent can bring to a valuation is their local knowledge. However, if you don’t live nearby it can be difficult to know which agents are actually any good.
You may also need to arrange the payment of inheritance tax before applying for probate. There’s normally no inheritance tax to pay if the value of your parent’s estate is less than £475,000, however you will still need to report the value to HMRC. Usually funds from the estate can be used to pay any Inheritance Tax.
A grant of probate, or letter of administration, is not required to put a property on the market. You are able to advertise, have viewings and even accept an offer before receiving your grant.
Technically you can even exchange contracts before receiving your grant, but this is very rarely done and isn’t advised. Exchanging contracts without probate would only be possible on the basis that probate is granted in time for completion. This carries a huge level of risk, and could lead to the sale falling through at the last minute.
You will not be able to complete the sale without probate having been granted. If you choose to market a property before applying for probate you may end up causing delays in the long run as you wait for the grant to arrive.
Selling a home comes with a number of costs, and it’s important to be prepared. When selling an inherited property there are a couple of additional costs to bear in mind:
Probate application fee: The application fee for a grant of probate is £215.
Capital gains tax: Capital gains tax is due on any amount you make above the value of the property when you inherited it. This is why it’s necessary to report on the value of the property when applying for probate. If your parent’s home was valued at £200,000, and you sell it a couple of months later for the same price, you will have made a loss - once estate agent and solicitor fees have been factored in. In this case you would not need to pay capital gains tax. However, if you sold the property for £300,000, you would need to pay tax on the £100,000 you have made (minus any allowable deductions).
Allowable deductions from capital gains tax include any fees that you had to pay to inherit and sell the property. These could be fees from: solicitors, surveyors, and estate agents. Or costs of anything that significantly improved the property and its market value, for example: redoing the kitchen, replastering walls, or installing central heating. Make sure you keep any receipts for fees or work done, no matter how small.
Allowable deductions unfortunately do not include maintenance costs, or replacing rooms and fittings with something of a similar standard. Any improvements claimed need to be a genuine upgrade to count.
If you need extra advice about the costs of selling, check out our guide here.
Or if you want to chat to someone about the process of selling your parent’s property, please give us a ring on 0203 608 6556 or send an email to firstname.lastname@example.org.
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