Written by Emma Willison, Solicitor at Spire Solicitors LLP
Probate is the legal process for dealing with the estate of someone who has died. Before the next of kin or Executor named in the Will can claim, transfer, sell or distribute any of the deceased’s assets they may have to apply for probate.
If there is a property to sell, there are a number of things to be mindful of as the process is slightly more complicated than a regular sale.
Grant of Probate
Before you can sell the property, you will need to obtain a Grant of Probate or Letters of Administration as HM Land Registry will not transfer the property to a buyer unless the grant has been received.
Who pays for the cost of selling a Probate property?
The deceased’s estate should bear the costs of selling the property. As the conveyancing process is the same as any other property transaction it should not incur any greater legal costs.
Inheritance Tax
Inheritance tax may be payable if a person’s estate is worth more than £325,000 (subject to exemptions, reliefs and the residence nil rate band) when they die. If the estate is subject to inheritance tax and HMRC have not yet agreed the amount of Inheritance Tax due, HMRC will use the sale price of the property as opposed to the property’s date of death value. This can result in an increase in Inheritance Tax due to HMRC. Executors and Administrators should keep this in mind when selling a property as part of the administration of the estate.
Capital Gains Tax (CGT)
If you are selling property that was not the deceased’s main residence, Executors and Administrators need to be weary of CGT. The value of the property for CGT purposes is the value at the date of death. If the property is not sold for some time after the issue of the Grant of Probate or Letters of Administration and the value of the property increases, the Executors or Administrators may incur a CGT liability. However, Executors or Administrators can use their CGT allowance of £12,300 in the tax year the death occurred and for two years after death. There may even be the option of using the beneficiaries CGT allowances.
Other considerations
If a property is vacant for more than 30 days, the Executors or Administrators will need to inform the insurers. If the property is damaged after death and the insurers have not been notified about a change in the policy, they may refuse a claim.
If the property has an outstanding mortgage, these payments will still be due until the property is sold and the mortgage can be repaid. Executors and Administrators should ensure that all mortgage payments and utility bills continue to be paid. These expenses can be claimed back from the estate.
If you would like to discuss any points in this article further, please contact Spire Solicitors LLP on 01603 677077 for all your legal needs.
