Options for insurance for probate house.

WIAWSNB

Hi.

A relative has been granted probate for a late friend's estate which includes a house - the house was left to the executor, my relative. Up until now - whilst probate was being sought, and since being granted - the house was insured using an Unoccupied House policy.

She now wishes to tidy the place up for ultimate sale, with no real rush to do so - and she'll be doing most of this herself. She also has a niece who would find it a useful place to use as a base to get to work, for at least a few days each week.

So, would it be easier and cheaper for the executor to take out a 'normal' house insurance policy now, on the basis that the house is lived in? For my relative, it would mean a cheaper policy (I suspect), no requirement for evidenced 'condition' visits or proving minimum heating levels, payment towards the running costs (utilities and stuff), the house could be spruced up with the niece's help, and it would now also be sold as a lived-in 'home' and not as a 'probate sale', which I think would potentially increase its value.

Any overlooked issues? (Not including them falling out or niece squatting...)

Thanks.

p00hsticks

Bear in mind that while the property remains unoccupied there is a six month Class F exemption on the council tax following probate, which would cease when the property is occupied.

The savings on council tax will more than likely outweigh the savings on insurance.

Also bear in mind that there will be a potential Capital Gains Tax liability on any increase in value over that declared for probate - it's usually considered not worth the effort in spending lots of time, effort and money doing up an inherited property if the intention is to sell it rather than live in it, unless the property is in such a state it's unmortgageable.

WIAWSNB

https://forums.moneysavingexpert.com/discussion/comment/81896088#Comment_81896088

Very good point - thank you.

lincroft1710

Also bear in mind that after the 6 month CT free period has ended, if the property remains empty for 12 months beyond that date, double CT may be charged.

I agree with @p00hsticks that it is not worth time, money, effort doing the place up

WIAWSNB

It's already 4+ months after probate was granted, so the CT holiday is nearly over anyway. Does that make a difference?

p00hsticks

https://forums.moneysavingexpert.com/discussion/comment/81896599#Comment_81896599

I think you saw my initial post before I edited it to add the following ….

There will be a potential Capital Gains Tax liability on any increase in value over that declared for probate - it's usually considered not worth the effort in spending lots of time, effort and money doing up an inherited property if the intention is to sell it rather than live in it, unless the property is in such a state it's unmortgageable.

If the intention is to sell it, in her shoes I'd get it on the market straight away as is - the market usually picks up in the spring.

WIAWSNB

https://forums.moneysavingexpert.com/discussion/comment/81896795#Comment_81896795

Thanks.

All interesting stuff.

I have no direct experience or understanding of such situations myself, but have to say I'm a bit surprised at what you say. I've sort of been aware for always, not least from this forum, of, "Why is it so cheap? Ah, it's a probate sale..."

Really, it isn't worth tarting up a house, left empty now for nearly a year, to make it a lived-in 'home'? And lose the 'probate' moniker?

You could well be right - I'm just surprised.

As for the increase in value, who determines how much it has increased? That suggests it is 'valued' at some starting point, and this is compared with the actual sale price achieved?

I understand the intention is not to 'renovate' or anything like, but to tidy it up and make it a lived-in home. You reckon no more desirable?

Ta.

Angelica123

https://forums.moneysavingexpert.com/discussion/comment/81896858#Comment_81896858

Renovations don't add value to properties (unless they add space such as an extra bedroom). They can sometimes help sellability but it won't affect overall value. You can read many posts of people who have spent a lot on renovations only to find it hasn't increased value in the way they have liked.

Being a probate sale doesn't inherently reduce the value of a property. Your relative is in a better position if probate has been granted as that can take ages to come through. I don't understand the argument regarding showing it being a "lived in home" - presumably the late friend was able to live in it until their death.

Clean and tidy it up from the perspective of removing the items in the house and giving it a spring clean. Fix things that would make it unsafe to live in. Any further efforts to spruce up the place will likely be a waste of time unless your relative is a keen property developer who enjoys doing up properties in their spare time so is doing it for larks.

Bigphil1474

The property will have been valued as part of the probate process, which might have been 6 months ago. If it is sold for more than that then there may be CGT to pay.

Your relative needs to check whether they were left the house in the will, or the proceeds of sale from the house. The executor could sell the house before the estate is concluded so that if there is any tax to pay, the estate pays it rather than the beneficiary. Obviously, if your relative is inheriting everything, it kinda makes no difference.

It took a year between my dad dying and his estate being concluded and the house being sold, but fortunately we slightly over estimated the value of the property as part of the probate process, so when it was sold, it was sold for a similar price.

WIAWSNB

Thanks all.

I don't imagine 'renovation' is on the cards at all, but possibly things like a repaint - my relative is a dab-hand at this.

Yes, it should be perfectly livable-in, tho' I understand/expect very dated.

I didn't realise the house would have been officially valued at some point during the private application.

My relative is the executor and residual (and main) beneficiary, apart from some charities.

Thanks.

p00hsticks

From the sounds of it they've already had getting on for a year where if they'd wanted to (as executor and residual beneficiary) they could have been sprucing it up while waiting for probate if the intention has always been to sell it straight away. But you say that they're in 'no real rush' to do so.

They need to do the the maths. If as you say the six months Class F is nearly up then every month that a sale is delayed means another months council tax, utilities, insurance etc. Do they think that in each and every month they can do enough work to make that much more on the selling price ?

Plus we're approaching spring which traditionally is the peak house buying and selling season. I'd say if they are serious about selling they at least get several estate agents in now to see what they suggest in terms of making the property more saleable.