Selling an inhertied house

Mismanagement

Hello all,
hoping someone can guide me through how we deal with selling an inherited property.
We recently inherited a property from MIL . We do not already own a home. It is on the IOW which is too far away for us to live in because of the nature of OH work. We would like to sell it and buy a small flat nearer to where we work. Would there be capital gains tax to pay on this sale. There is a tenant in the house and we have not actually lived in it and I read somewhere that you cant be exempt from CPT if you have not lived in property.
Help

Mojisola

Unless the value has gone up a lot from the time you inherited the house to the time you sell it, you won't have to pay CGT.

https://www.hmrc.gov.uk/cgt/intro/gifts-inherit-divorce.htm

Tax at the time you inherit
When you inherit an asset from someone who's died, there's no Capital Gains Tax to pay at that time.

Selling or disposing of assets you've inherited
When you sell or dispose of an inherited asset, you may be liable to Capital Gains Tax on any profit or gain you make.
You'll need to get a valuation of the asset at the date of death. Use this value as the cost of your asset to work out your gain or loss. If the value has been agreed for Inheritance Tax purposes you should use the same valuation.

Mismanagement

Thanks for quick reply
The value is the same as when inherited. and well under inheritance tax threshold. Is there a time limit or restriction on selling as far as you know?

kingstreet

A lot of your potential market is going to disappear if there's a sitting tenant.

Do you intend to provide vacant possession on completion? If you do, you need to study your legal obligations to the tenant, before you attempt any action.

Mojisola

Mismanagement wrote: »

We recently inherited a property from MIL .

There is a tenant in the house

As kingstreet says - you are now landlords and need to make sure you are meeting your legal obligations.

You also need to declare the rent to HMRC. If you're claiming any means tested benefits, the rental income may affect what you get.

There's no rush to sell - if you have a good tenant, you might want to consider keeping the property for a while. GCT will only be an issue if property prices start to rise again.

G_M

Tenancy.
You are now landlords with some strict legal duties. What kind of tenancy is it? Read this post:

New Landlords (information for new or prospective landlords)

Capital Gains Tax
It may be payable. How long did MIL own it? Did MIL ever live there (as her main residence)? How long has the tenant been there? YOU may not have to pay CGT but MIL's estate may!

Inheritance
Has probate been granted? Has Inheritance Tax been paid (if due)? Whose name is now on the Title?

Sale
You can sell it with the tenants there - but it will take much ponger and the price will be much lower.
Or you can evict the tenants (depending on the typw of tenancy!) and then sell it empty.

Mismanagement

Great advice all thanks
There is a tenant and we have just granted another shorthold tenacy for 6 monhts. It is done through a letting agent. We have advised them we wish to sell at the end of this 6 months and we will offer for sale with vacant possession.
MIL lived there for 30 years prior to her having to move to a care home, where she was for just over a year before she passed away. probate is all done and dusted and there was no inheritance tax to pay as value was about £175 k . Both our names are now on the title. And we will of course declare rent to HMRC

tim123456789

Mismanagement wrote: »

Great advice all thanks
There is a tenant and we have just granted another shorthold tenacy for 6 monhts. It is done through a letting agent. We have advised them we wish to sell at the end of this 6 months and we will offer for sale with vacant possession.

Then you need to have a firm moving out date before marketing.

There is no guarentee that the tenant will move at the end of the lease period. You may have to formally evict them. This will take several months extra.

(and note that this is the expected process. The tenant will not be at fault if they insist that you do this).

tim

Mismanagement

good point I hadnt thought of Tim.
Our intention would be to have vacant possesion before even marketing as there is some things I wanted to do to the house and garden. If the tenant intends to not move, do they usually tell you or is it a sort of turn up on the day and they havent moved sort of scenario. Our tenant is very nice but you never know.!

RAS

Mismanagement wrote: »

There is a tenant and we have just granted another shorthold tenacy for 6 monhts. It is done through a letting agent. We have advised them we wish to sell at the end of this 6 months

Do not assume that the estate agent has complied with the LL's legal responsibilities. They need NO legal knowledge to run and agency.

You are responsible for the gas certificate and the deposit registration. have you seen both certificates? Are you sure that both (and the presribed information) have been sent to the tenant?