Selling an inherited property: the practical steps
An inherited property is an asset and a liability at the same time. Deciding what to do with it is easier once the costs are clear.
An inherited property arrives with a set of obligations attached. Insurance, council tax, utilities and security all continue whether or not anyone is living there, and the property has to be secured and maintained until it is sold or let.
The first practical step is to establish the legal position: whether there is a will, whether probate has been applied for, and who has the authority to deal with the property. Nothing can be sold until that authority exists.
The immediate priorities
These matter because the costs accrue whether or not the property is being dealt with, and some of them become problems if neglected.
- Secure the property, and change the locks if keys are unaccounted for
- Notify the insurer, because an unoccupied property is often not covered by the deceased's policy
- Arrange for the post to be redirected, which also prevents the property looking abandoned
- Keep the heating on at a low level in winter to prevent burst pipes
- Clear the property once the beneficiaries agree, and remove anything of value
- Establish the council tax position, which may include an empty homes premium
Sell, rent or keep
Selling is the default and usually the right answer, because it converts an illiquid asset into money the beneficiaries can use and removes the ongoing costs. It also finalises the estate, which matters for the executors.
Renting is possible but adds a layer of complexity and obligation: compliance, licensing, management and tax on the income. It is worth considering only where the property is genuinely suited to letting and the beneficiaries are agreed on holding it.
Keeping an empty property is rarely sensible. It costs money, it deteriorates, and it creates a dispute between beneficiaries about who is paying for what and when it will be sold.
The tax points
Inheritance tax may be payable on the estate, and the property's value forms part of that calculation. For capital gains tax, the property is usually treated as acquired at its probate value, so the gain is measured from that figure rather than from what the deceased paid — which often means little or no gain if the sale follows quickly.
The executors' costs, including legal fees and the costs of maintaining the property, are paid by the estate before distribution. Keeping a record of them matters, because they reduce what is distributed and beneficiaries will ask.
Common questions
- Do I pay capital gains tax on an inherited property?
- Usually only on the increase in value since the date of death, because the property is treated as acquired at its probate value. If the property is sold shortly after death at a similar figure, there is often little or no gain. Take advice on the specific figures, because the rules interact with inheritance tax.
- Should I sell or rent an inherited property?
- Selling is usually the better default, because it converts the asset into money the beneficiaries can use and ends the ongoing costs. Renting adds compliance, management and tax obligations and creates a long-term commitment between beneficiaries who may not agree. Keep it only if there is a clear shared reason to.