We often get left valuable things in a Will, but does it get better than being left a whole property? It may seem amazing to be left such a substantial gift, but it isn’t always an easy transition of ownership, especially if you consider issues surrounding contentious probate.
Other problems people may not consider can include knowing when and how you should pay inheritance tax, and deciding what to do with the property even if you have no intention of living there.
If you’ve inherited a property in London, there are a few options available that don’t necessarily mean you have to make the move there. This article will cover four options of what to do with the property. We’ll also discuss how to avoid Will disputes and when you should pay inheritance tax.
4 Things to Do with Your Inherited Property
Make the Move to London
One option would be to take the opportunity by the reins and make the move into the property. Moving to London (depending on where you are now) could open exciting new doors and opportunities. It’s worth considering!
One of the most difficult factors about living in London is the cost of rent or mortgage. So, if you’ve inherited a home without having to pay this, it could be the factor that swings in your favour of making the move.
2. Donate the Property to Charity
If you have no intention of moving into the property, one option could be to donate the property to a charity. Many charities accept property as a gift or donation. By donating property, you will reduce the amount of inheritance tax paid overall.
The amount of inheritance tax would be calculated without the value of the donated property added.
3. Sell the House On
Selling a property you’ve inherited can be a tricky job, and sometimes often emotional if it’s a family home. It’s made trickier if you live far away from the property and you may want to consider spending time at the property to sort everything if you decide on selling up.
One of the first things you need to do if you go down this route is to clear the house of its contents. You could sell on the furniture or donate the content to charity. There are plenty of professional services available to help you out with the process and cut down on time.
One thing to note, if you do decide to sell the property, is you’d have to pay capital gains tax as it isn’t your main form of residence.
4. Become an Accidental Landlord
Becoming an ‘accidental landlord’ could mean you have an extra source of income without having to put a lot of the initial groundwork in to begin with of finding or buying a property to let out. This is an excellent option, as not only will you make an income, but also it can prolong your choices with the property.
You may not want to move into the property now but, by leasing it and keeping it in your name, you have the option down the line still. Of course, there is a lot to consider before deciding on becoming a landlord; there’s a lot of responsibility to take on, so make sure you do your research first.
What to Look Out for if You Inherit a Property
The last thing you want to face after a loved one has passed is arguments over items or gifts left to you by family or friends of the deceased, that they believe they have a claim to. Will disputes can be lengthy, costly and cause lifetime damage to relationships with those involved.
Reasons why someone may contest a Will include:
- The deceased didn’t have mental capacity when writing the Will
- The deceased didn’t understand or approve the content of the Will
- Undue Influence (deceased was coerced into making a decision)
- Forgery and Fraud
Of course, all these reasons would have to be proven and a court would have to be satisfied that enough evidence has been given to make any official changes to the Will.
There are a couple of ways to protect a Will from a dispute claim after your days. One of the easiest ways is to have open discussions with friends and family about what you intend to leave behind for them.
Other ways include destroying any previous old Wills (to avoid confusion) and appointing an experienced solicitor to ensure that all intentions are legally binding and untouchable. By doing those three things, you can feel at peace with your decisions knowing intentions have been clear and protected.
One thing you need to be aware of if you’ve inherited a property (especially in London) is inheritance tax. If the combined value of the deceased’s estate is more than £325,000 then you will have to pay inheritance tax.
The standard rate of inheritance tax is 40 percent, but this only applies to any amount over £325,000. The average property value in London is £681,000, so it’s likely you’re going to have to pay inheritance tax.
Inheriting a House Without a Mortgage
If you’ve inherited the property with a mortgage remaining, you will be liable to pay this, even if you don’t live there. Sometimes, there may be some form of life insurance of the deceased in place to cover these costs, but it all depends on what the deceased has put in place.
You have two options if there’s no life insurance policy in place to cover the cost of the remaining mortgage. Once the property is officially yours after probate is settled, you can either sell the property and the use the funds to pay off any remaining mortgage. Or you can take out a new mortgage if you intend on living there.
Have You Inherited a London Home?
Hopefully you won’t face any issues with Will disputes, and it’s a plain sailing experience of transferred ownership. However, make sure you seek legal advice in whatever you decide on doing with the inherited property.
There are always hidden costs involved with any option (apart from donating to charity) and various taxes that may apply. It’s worth paying the legal fees to make sure all bases are covered, and you’re not left confused by anything.
Lastly, make sure you take your time with any decision making, as it’s often an emotional time too, and these processes are often not quick ones.
Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a lawyer/solicitor if you’re seeking advice on the law. We are not liable for risks or issues associated with using or acting upon the information on this site.