Things to Keep in Mind When Inheriting Property
Inheriting a property is often a bittersweet experience, knowing that you may now be more financially flexible is a massive weight off your shoulders while the circumstances behind it may be tragic.
Giving yourself time to grieve and emotionally recover is possibly the most vital part of the process, but afterwards, you may find yourself wanting to get your affairs in order especially if you may have received property via the will. Read on to find out about some of the factors that need to be taken into account on the back of inheriting a property.
The first things that need to be kept in mind when having inherited property are the mortgages and loans associated with it. When a property changes hands, so does its mortgage and if there is a chunk left to pay off, you need to integrate this into your financial projections.
In instances where you may have your own financial burdens, maybe even your own mortgage, having to pay off an additional house may be too much to handle. This makes renegotiations with the lender important in order to try and get more favourable terms to suit your financial flexibility. If there is simply no way you can afford the mortgage (or you do not wish to) selling the property and using a portion of the sale value to repay the mortgage and keeping the difference can be a good way to mitigate the loan.
Depending on the size and value of your property you may be liable to pay inheritance tax. Properties under the value of £325,000 are exempt and do not require any additional taxation fees to be paid. On the other hand, if the property is over the price of £325,000 any additional income from the sale would be taxed at 40%.
For example, if a property is sold for £500,000 the £175,000 on top of the £325,000 would be taxed at 40% meaning you would make a total of £430,000 from the property sale. Ensuring that you’re aware if you need to pay inheritance tax before selling a property is vital as you do not want to be hit with hidden fees.
Capital Gains Tax
Opposed to what many believe capital gains tax is, it actually represents the profit made on a property after being inherited. This is measured by comparing the value of the property when inherited to the value at which it was sold. Capital gains tax currently stands at £12,570 and any gains made over this are taxed at 20%. Similar to Inheritance Tax, when looking to sell your property, it's important to know whether you have to pay tax so that you can avoid surprise fees.
The movement of property often generates some form of taxation or financial impact and knowing what you may be hit with before it hits you is one of the most vital abilities in the property market.
Contact Hadleigh Estate Agents for Property Selling
If you’re looking to sell your house, then please get in touch with our property experts. Hadleigh is a market leader in the Harborne and Edgbaston areas. Our friendly, experienced, and qualified team of estate and letting agents like to take the time to understand your needs to find out exactly what you’re looking for in the sale.
Get in touch with us on 0121 427 1213 or you can send us an email here.