Selling a house after the death of a parent

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.

How do you sell the house of a deceased parent?

This will likely be a stressful time for you and your family, but luckily the steps for selling are fairly straightforward:

1. Check the will

First, you need to check if your parent has left a will behind. Their will confirm whether there are any names attached to the property, as well as any other important bequeathments you'll need to consider.

2. Apply for probate

If you're named in the will as 'executor', you can apply for probate. Probate is a formal procedure whereby you gain permission to deal with someone's property, money, and estate when they die.

3. Sell your inherited house

Selling your parent's house is no different to selling any other property you own. You can find out more about the selling process in our useful guide. Otherwise, you can check out our guide 'How much does it cost to sell a house?' for more information on fees and expenses.

4. Pay off any taxes you owe

Depending on the situation, you may have to pay taxes on the completion of the sale. These include:

• Stamp Duty
• Income Tax
• Capital Gains
• Inheritance Tax

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What is probate?

‘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.

How long does probate take?

Probate takes 4 weeks on average. 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.

What do I need in order to apply for probate?

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.

Do I need probate to sell my parent’s house?

Yes you will need probate in order to sell your parent's house unless your name is already on the title deeds, you will need to go through probate to sell your parent’s house. You won't, however, need probate to market it.

When is probate required?

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.

When is probate not required?

Probably may not be required if your parent’s property was jointly owned, 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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Can you put a house up for sale before probate?

Yes you can put a house up for sale before probate is granted but you won't be able to complete the sale. 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.

How soon can you sell a house after someone dies?

You can sell a house as soon as probate is granted after someone dies, this usually takes 6-8 weeks.You can start marketing the house immediately after someone dies. However, to actually sell the property, you need to wait until probate has been granted. This usually takes six to eight weeks, after which you can complete the sale of the decedent’s house.

It’s up to you how soon you sell the property after probate. However, it’s better to sell sooner rather than later, as the house can fall into disrepair.

Costs of selling an inherited home

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:

1. Probate application fee: The application fee for a grant of probate is £215.
2. 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

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
• 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.

Do you have to pay taxes on the sale of a deceased parent’s home?

It depends. When your parents pass away, there are several taxes you might have to pay on the sale of properties left behind:

Stamp Duty Land Tax

You don’t have to pay any Stamp Duty on a property you’ve inherited, unless you’ve received more than £325,000 worth of non-exempted gifts in the seven years leading up to the decedent’s death.

Income Tax

If the deceased owed Income Tax, you may have to ensure the correct amount of tax was paid. You too, may owe this on any profit you earn from assets that generate income, like commercial or rental property.

Capital Gains

If you sell a property you have inherited, you may have to pay Capital Gains if the property’s value increases during probate.

Inheritance Tax

If the property is valued above £325,000, you will have to pay Inheritance Tax if the deceased’s estate can’t pay it. It’s usually charged at 40%.

Should I buy my parent’s house before they die?

Buying your parent’s house before they die might seem strange, but it’s a useful way to get your inheritance without probate or extensive taxes. It can also help your parents move closer to you, especially if they are at an advanced age and struggling to maintain their home. However, the house must be sold at a fair market price, otherwise the property will be deemed a gift and result in tax implications.

As a way around this, parents can loan money to their children so they can afford to purchase the home at a fair market price. However, parents must charge interest to their children and declare this interest as income. These interest rates are much lower than if the children were to obtain a mortgage.

You should buy your parent’s house before they die if:

• You want to avoid probate or Inheritance Tax
• You want your parents to move closer to you
• Your parents are struggling to maintain their home
• Your parents can help you purchase the home at a fair price

You shouldn’t buy your parent’s house before they die if:

• You can’t afford to buy it
• Your parents are planning on selling it anyway
• You can’t commit to the hassle of selling
• You don’t mind paying taxes

How to sell parent’s house before death

Selling your parent’s house before their deaths could save you from both probate and Inheritance Tax.

There are several ways you can do this:

• Your parents could sign over ownership of the property to you to sell. However, you would still need to pay Capital Gains.
• Your parents could sell the property themselves (not paying any Capital Gains), and then transfer the money over to you. However, more than £3000 a year will be subject to Income Tax or ‘Gift Tax’.
• You could buy the property from your parents at a fair market price and then sell it.

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If you need extra advice about the costs of selling property, 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 hello@getagent.co.uk.