So, you’ve inherited a property? What happens next?

So, you’ve inherited a property? What happens next? Inheriting a property can bring a mix of emotions. Alongside grief, if your inheritance is the result of losing a family member or friend, there’s often, a maze of legal, financial, and practical decisions to navigate. Whether you’ve inherited solo or you were left a share of […]

So, you’ve inherited a property? What happens next?

Inheriting a property can bring a mix of emotions. Alongside grief, if your inheritance is the result of losing a family member or friend, there’s often, a maze of legal, financial, and practical decisions to navigate. Whether you’ve inherited solo or you were left a share of the old family home alongside your siblings, knowing your options and the financial and legal obligations which come with your inheritance is key to making the most informed choices.

In this article, we’ll walk you through what to do when you inherit a property in the UK and explore your options, including the tax implications that might apply depending on your decision.

First steps: Establishing the legal position

Before you can decide what to do with an inherited property, the estate must go through probate – the legal process of administering the deceased person’s estate. If a will exists, it should outline who inherits what. If there’s no will (known as dying intestate), the law decides who inherits, usually starting with spouses or children.

To manage the estate, someone (often the next of kin or a named executor in the will) must apply for a grant of probate (or letters of administration if there is no will). Once granted, the executor can begin to deal with the estate, including property.

For more information on the probate process, visit www.gov.uk/applying-for-probate

Options once the property Is legally yours

Once probate is complete and you are the legal owner or co-owner, you have several options:

1. Move in

You can choose to live in the property yourself. This might be especially appealing if it’s mortgage-free or holds sentimental value. Bear in mind you’ll be responsible for ongoing bills like utilities and council tax, home insurance and maintenance, and if the property needs any repairs, those costs fall to you.

If you co-inherit the property (for instance, with a sibling), you may need to negotiate a buyout or shared arrangement before moving in.

2. Rent it out

Letting the property can be a smart way to generate passive income. You’ll need to meet landlord obligations, such as ensuring the property is safe, obtaining an Energy Performance Certificate (EPC), and dealing with repairs.

This option can also buy you time to decide whether to keep or sell the property in the long term, especially if the market isn’t favourable for selling right away.

3. Buy out other beneficiaries

If the property has been inherited jointly, but only one of you wants to keep it – for living in or letting – you could buy out the other party’s share. This requires a professional valuation and a solicitor to draw up the sales agreement.

You may need to secure a mortgage or release equity from another asset to finance the buyout. All parties must agree on the terms, which is why it is important to have the property valued to avoid any disputes.

If you have a mortgage for an existing property, you will usually need to inform your mortgage lender that you have inherited another property since this is likely to change your financial situation.

4. Sell the property

Selling the property is often the simplest and cleanest solution, particularly if multiple people inherit and want a straightforward division of the proceeds. You can use an estate agent or sell at auction, depending on the property’s condition and desirability.

Before selling, consider any upgrades or repairs that could improve its value. And remember, once sold, taxes may come into play depending on how much the property has appreciated in value since the person who left the property to you acquired it.

To learn more about selling an inherited property, check out this helpful guide: www.yopa.co.uk/homeowners-hub/selling-inherited-property/

Tax implications of inheriting property

Inheritance Tax

Inheritance tax is paid from the deceased person’s estate before you inherit anything. The threshold for inheritance tax is currently £325,000 (as of 2025), or up to £500,000 if the estate includes a family home passed to direct descendants.

• Inheritance tax is charged at 40% on the portion of the estate above the threshold.
• However, you as the beneficiary don’t usually pay the tax directly – it’s the responsibility of the estate.

If the estate’s value is close to or above the threshold, it’s worth consulting a solicitor or tax adviser.

Capital Gains Tax

You don’t pay capital gains tax when you inherit a property. But if you later sell it (and the property has risen in value since the date of death), capital gains tax might apply.

• Capital gains tax is based on the property’s gain (the difference between its sale price and the market value at the time of death).
• Everyone has an annual tax-free allowance (called the Annual Exempt Amount). In 2025, this is £3,000.
• If the gain exceeds this amount, tax is payable – typically at 18% (basic rate) or 28% (higher rate) for residential property.

Example:

If the property was worth £200,000 at the time of inheritance and you sell it at a later date for £250,000, the gain is £50,000. After subtracting your allowance at the current rate, you would owe capital gains tax on £47,000. This would be either £8,460 at the basic tax rate or £13,160 at the higher rate.

If you’re letting out the property before selling, bear in mind that rental income will be subject to income tax which is separate from capital gains tax.

What if the property has a mortgage?

If the deceased still had a mortgage on the property, you may inherit this debt along with the asset, depending on the type of mortgage and whether it was covered by a life insurance policy.

You’ll need to check with the mortgage provider and decide whether to repay, remortgage, or sell the property to clear the debt. Co-heirs will need to agree on how to handle this.

Practical tips for managing an inherited property

1. Get a professional valuation – You’ll need this for probate and tax purposes.
2. Secure the property – Change locks if necessary and inform the insurer that the property is unoccupied.
3. Notify utility companies and the council – You may qualify for a council tax exemption or discount during probate.
4. Check for insurance – Standard home insurance may not cover unoccupied homes. You may need specialist cover.
5. Get legal advice if needed – Especially for shared ownership properties or complex family situations.

Inheriting a property in the UK comes with many decisions – emotional, financial, and practical. Whether you plan to live in the home, rent it out, buy out other beneficiaries, or sell it outright, it’s important to understand your responsibilities and the potential tax implications.

While the process can feel overwhelming at first, taking it step-by-step and getting advice when needed – especially from a solicitor and/or financial advisor – will help you make informed choices that suit your circumstances.