Inheritance advice pse?

stevwarn

Sadly an elderly relation recently died and has kindly left my sister and I his house in his Will. We are also both executors of the Will.

This inheritance was unexpected and I am not sure what to do, this is further complicated as my sister is in a different financial position to me i.e. she has no debts, earns good money and has paid off her mortgage.

I have a £80k morgage (20 years left), which is currently fixed at 5.09% until summer 2009; I have no other debts and earn an average salary. My wife is a non-tax payer. The house I stand to inherit is worth approximately £130k-£150k, but we have yet to have it valued; it is a one/two bedroomed terraced cottage in Somerset located in a small hamlet, with country views. It needs IMHO modernising i.e. new kitchen, bathroom and decoration throughout. Our options are to sell once probate is granted (in 6-8 weeks time), rent or holiday let until the market recovers?

I welcome any constructive advice as I am truly unsure which desision to make given the current housing market.

sascasjor

You could put it up for sale and see how things go. With regards to modernisation, I was in pretty much the same position with my late father's house and was advised by estate agents that doing all the work may just get me the outlay back but may not. He advised that the house would have more appeal as somewhere to 'do up' and I think he was right. We put the house on the market just before Christmas, had 17 viewings and 9 offers (some stupidly low though!). Anyway it sold in Feb to a lovely family. Good luck x

Doozergirl

I would sell. I wouldn't fancy letting something that needed work.

If you think it needs a new kitchen, bathroom and decor, then I am guessing you have no experience of renovating a property. In most cases, if the decor is particualrly tired, then the house itself is likely to need work. Occasionally you'll get an immaculate house but in my experience, they have had close family to help them keep on top of the maintenance. I'm guessing again that perhaps you weren't that close if the inheritance is unexpected. The value is in the bricks and mortar, not a pretty kitchen. If you're not in the trade, you will pay a lot more for the changes and I agree, you probably won't see any extra income from it.

I would very happily slice my mortgage right down. Sell now for a sensible price. Get it on the market asap and inform the EA that you are waiting for probate. Or see if your sister wants to buy you out!

Trollfever

You have an unexpected windfall.

Take it.

Let somebody else take the risk and profit/loss.

stevwarn

Thanks for the repies and advice. I live 1 1/2 hours away from the house so you are right I didn't help with the house upkeep. It has new UPVC window's and doors and the structure to my untrained eye seems okay. I am a practical person and would tackle most DIY jobs, but I have not fitted a kitchen before. My worry is what happens if the property market crashes by the time probate comes through? Sascasjor you sound like you sold at the right time and the EA advice was sound. If I decide to rent the cottage until the property market increases again I think I have two years before Capital gains is due, can anyone confirm?

Bungarm2001

Personally, I would hang on to it for a while unless the market down there is fairly bouyant. I know it used to be.

AND with the greatest respect to the previous poster, if you decide to sell, I would most DEFINITELY NOT tell the EA that you are awaiting probate. The EA would immediately see this as an 'executors sale' and price accordingly. In my experience, this would be lower than usual as they will see you as being a bit desparate to sell. I'm not saying that it will definitely happen, but just be a bit wary of letting an EA know more than they need to.

PS The property market will not 'crash' in 6-8 weeks Please don't feel rushed into anything. You have an unexpected windfall, both of you need to carefully consider all your options before you make a final decision.

Bungarm2001

I thought that 2 year rule applied to our friends across the pond? or to anyone buying a rental overseas (in certain countries) and disposing of it after 2 years? I could be wrong.

As far as I know, you have to pay CGT on a disposed asset in the following year (unless it was shares. Different rules for them.) ....anyway, this from the Taxman himself ..

"....if someone dies and leaves their belongings to their beneficiaries, there is no CGT to pay at that time - however if an asset is later disposed of by a beneficiary, any CGT they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal."

MrSafeGaz

I have no real experience in this kind of thing so take this with a pinch of salt

Putting myself in your position I would probably sell the house. It sounds like it would take a fair bit of time and money to get the house up to scratch to be able to let it out. You may or may not make a profit and in the nearish future the house may or may not go down in price. What is guaranteed though is that you will be paying a significant amount of interest on your existing mortgage for a fair amount of time. The amount of money you would effectively save by selling off the house and almost settling your mortgage would be significant (45-50k). Once you have paid off your mortgage you will have much more spare cash to either invest or to just enjoy life.

lawrie28

I would sell, see if your sister wants to buy you out, or with an estate agent. If your mortgage deal is 5.09%, you should get a decent interest rate on the cash and make a little there before reducing the mortgage next summer. If it is a decent sized plot, then the only thing that may add value is planning permission for an extension. You would be best not dong it up yourself, people feel they have more value for money in a doer upper.

stevwarn

Thank you all for taking time to give me your thoughts and kind wishes. We are having an Estate Agent around next week for a 'valuation' and hopefully they won't cotton on to it being probate sale! Why is it that doer upper's are more attractive than done uppers? Surely if you can do it up there is some added profit somewhere?

sascasjor

I should also have mentioned, you do not need to wait for Probate to sell the house, you just couldn't complete. From offer acceptance to completion will usually take at least eight weeks so Probate will almost certainly be through by the time you are ready to complete. Good luck x