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Inheriting private property

When you inherit a property, some decisions have to be made - you may wish to sell it, rent it out, or live in it. You'll also need to know if there'll be any tax to pay on the property. If you inherit part of a property you'll need to take joint decisions with the other owner(s).

Ways of inheriting property

There are three ways in which you might inherit a property (or part of one):

  • if the property was held under 'joint tenancy', the surviving owner inherits automatically - it's not subject to the will or law of intestacy
  • if the property was owned outright by the deceased, or jointly by owners who have died, the terms of their will(s) determine who inherits; if there is no will it is subject to the laws of intestacy
  • if the property was owned as a 'tenancy in common', who inherits the deceased person's share is determined by the terms of their will or (if there is no will) the laws of intestacy
  • What to do if there is no will

How tax and other debts affect inherited property

No matter how the property was owned, the value of the deceased person's share is counted as part of their estate. The personal representative or executor for the deceased person’s estate is responsible for dealing with the estate and settling all financial affairs. They must ensure that all debts and any tax due is paid before they distribute the assets of the estate.

If you decide to sell or rent out the property you’ve inherited, you may have to pay tax on the rental income or any profit you make when you sell it.

If you already own a home and decide to keep the house you inherited as a second home, you'll need to nominate one of your homes as your main home and let your tax office know, because you can only have relief from capital gains tax for your main home.

Inheriting a property with someone living in it

If you inherit part of a property and another owner is still living there you'll need to agree with them whether they will continue living there and under what terms, or whether the property will be sold. Bear in mind that their right to remain may be set out in the will.

If you inherit a property that has a tenant, you have certain responsibilities as a landlord. Their legal rights will need to be taken into account if you wish to sell the property. If you are in any of these situations, it's advisable to get advice from a solicitor.

Registering the property in your name

Once the property passes to you, you can register your ownership at the Land Registry. You don't have to do this unless the property is sold or mortgaged, but it will give you the best proof of ownership. It will also make things more straightforward when dealing with the property in the future.

Taking on mortgage payments

If you inherit a property which has a mortgage, you'll be responsible for the monthly payments even if you don't live there. If the payments aren't made, the property could be repossessed and sold to pay off the mortgage.

If you're worried about mortgage payments, it's important to get advice immediately. An adviser can help you work out your options and/or negotiate with your lender.

Renting the property out

If you decide to rent the property out, you'll have to pay tax on any profit you make from the rental income. You'll also have to follow relevant laws on the safety of the property and certain contents.

If you inherit a property in a trust

A trust is a way of holding and managing money or property for people who may not be ready or able to manage it for themselves. If you're left property in a trust, you are called the 'beneficiary'. The 'trustee' is the legal owner of the property. They are legally bound to deal with the property as set out by the deceased in their will.

Where to get help and advice

Inheriting a property can be complicated, so it's important to get legal advice from a solicitor. You can also get free and independent advice from a number of organisations such as the Citizen's Advice Bureau (CAB).

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