How to Sell an Inherited Property – A Step-by-Step Guide

Inheriting a property can be both a blessing and a challenge. While it may provide financial opportunities, it also comes with legal responsibilities and emotional decisions.

If you’ve recently inherited a house, you might be wondering what to do next. Should you keep it, rent it out, or sell it? For many, selling an inherited property is the best option to avoid ongoing costs and responsibilities. However, the process can be complex, especially if probate is required. Selling a probate property in Scotland involves legal steps, settling debts, and handling taxes before a sale can proceed.

This guide breaks down the full provess step by step, from understanding probate to choosing the best way to sell. By the end, you’ll have a clear plan to sell the property smoothly and stress-free.

Step 1: Consult the Will

In Scotland, the first step in selling an inherited property is to check the will. The will outlines who inherits the property and appoints an executor responsible for managing the estate. This includes valuing assets, paying debts, and handling the sale of the property if required. The executor has the legal authority to act on behalf of the estate and must follow the instructions laid out in the will.

What Happens If There Is No Will?

If there is no will, the estate is considered intestate and is distributed according to Scottish succession laws. The court appoints an executor, usually the closest relative, to manage the estate. In most cases, the property passes to the surviving spouse or children. If no immediate family members exist, more distant relatives may inherit. The appointed executor must apply for Confirmation (the Scottish equivalent of probate) before selling the property.

What If More Than One Person Inherits the Property?

When multiple beneficiaries inherit a property, all must agree on the next steps—whether to sell, rent, or keep it. If one heir wants to sell while another wants to keep the property, they may need to negotiate a buyout or reach a legal agreement. In cases where no agreement can be made, legal intervention may be necessary, and the property could be sold, with proceeds divided among the heirs. Seeking legal advice early on can help prevent disputes.

Step 2: Applying for Confirmation in Scotland

After determining that you've inherited a property, the next essential step is to obtain Confirmation—the Scottish equivalent of probate. This legal process grants the executor authority to manage and distribute the deceased's estate, including the sale of property. Here's what you need to know:

Understanding the Confirmation Process

Confirmation (or probate) is a legal document issued by the Sheriff Court, empowering the executor to access and distribute the deceased's assets. The process involves compiling an inventory of all assets, such as property, bank accounts, investments, and personal belongings.

When Is Confirmation Required?

Not all estates require Confirmation. Generally, if the estate's total value exceeds £36,000, you will need Confirmation. For smaller estates below this threshold, especially those without heritable property (land or buildings), the process may be more straightforward, and the Sheriff Clerk can assist with the necessary forms.

Who Can Apply for Confirmation?

The executor named in the will is responsible for applying for Confirmation. If there's no will, an executor-dative is appointed, usually a close relative. This individual must apply to the Sheriff Court for authority to administer the estate.

When to Involve Solicitors

While it's possible to apply for Confirmation without legal assistance, involving a solicitor is advisable, especially for larger or more complex estates. Solicitors can help with tasks such as obtaining Confirmation, paying debts, and ensuring compliance with legal obligations.

Understanding and navigating the Confirmation process is crucial for the smooth administration and eventual sale of an inherited property in Scotland.

Step 3: Getting the Property Valued

The next important step is to get the inherited property valued. An accurate valuation is crucial for several reasons, including ensuring that any taxes are calculated correctly and determining a fair sale price. It also helps you assess whether the sale of the property will be enough to cover any outstanding debts of the deceased.

How to Get an Accurate Property Valuation

1. Estate Agent Valuation Estate agents offer free valuations based on their market knowledge and recent sales in the area. It’s a quick and easy way to get an estimate, but it's good to get more than one opinion.

2. Surveyor’s Valuation For a more detailed and accurate valuation, consider hiring a qualified surveyor. This is especially useful for unique or complex properties.

3. Online Valuation Tools You can also use online tools for a quick estimate, though these are often less accurate than professional valuations.

4. Express House Buyers Scotland’s Free Valuation Service At Express House Buyers Scotland we offer free property valuations within 48 hours, helping you get a clear idea of your property's value with no obligation to sell.
   

An accurate valuation ensures you're prepared for any outstanding debts and can make informed decisions about selling the property.

Step 4: Handle Any Outstanding Debts and Taxes

Before proceeding with the sale of an inherited property in Scotland, it's essential to address any outstanding debts and taxes associated with the estate. This ensures that the estate is settled properly and that beneficiaries receive their rightful shares without complications.

Identifying the Deceased's Debts

To determine if the deceased had debts, start by reviewing financial documents such as bank statements, loan agreements, and credit card statements. Contact financial institutions, utility companies, and service providers to inquire about any outstanding obligations.

Settling Outstanding Mortgages

If the inherited property has an outstanding mortgage, you'll need to decide whether to continue payments, refinance, or settle the debt. The mortgage must be addressed before selling the property. Proceeds from the sale can be used to pay off the remaining mortgage balance, ensuring a clear title for the new owner.

Inheritance Tax (IHT)

In Scotland, Inheritance Tax is due if the estate's value exceeds £325,000. Estates valued above this amount may be subject to IHT at a rate of 40% on the value above the threshold. It's crucial to calculate the estate's total value accurately, including all assets and liabilities, to determine any IHT liability.

Settling Debts Using Estate Assets

Before distributing assets to beneficiaries, the executor must settle all debts using the estate's funds. This includes funeral expenses, outstanding bills, taxes, and any other liabilities. It's important to notify creditors of the death and provide them with the necessary information to claim debts.

Note: Tax laws and thresholds are subject to change. It's essential to refer to the latest guidelines or consult with professionals for current information.

Step 5: Choosing the Best Way to Sell

Once you have the property valued and have been granted probate, it’s time to decide the best way to sell. There are a few options to consider, each with its own pros and cons:

1. Selling Through an Estate Agent Pros: Estate agents can help you get the highest possible market price by listing the property and marketing it widely. They also handle negotiations and paperwork. Cons: The process can take time, with no guarantee of a quick sale. Fees for estate agents can also be high, and there may be delays if buyers need to secure financing.
   

2. Selling at Auction Pros: Auctions provide a quick and fixed sale date, and you may get a competitive price if multiple buyers are interested. Cons: There’s no guarantee of reaching the expected price, and the auction process can be stressful. You may also need to pay auction fees.
   

3. Selling to a Cash Buyer Pros: Selling to a cash buyer, like Express House Buyers Scotland, offers a fast, hassle-free process. The sale is quick, and you will avoid estate agent fees, repairs, and delays. Cons: The sale price may be lower than what you could achieve on the open market, but you trade this for speed and convenience.
   

Choosing the best method depends on your priorities—whether you want a quick sale, the highest price, or minimal stress.

Step 6: Pay Your Taxes

After selling an inherited property in Scotland, it's essential to address any tax obligations to finalise the transaction. Understanding which taxes apply and who is responsible for them ensures compliance with legal requirements and prevents future complications.

What Taxes Are Due After Selling an Inherited Property?

• Inheritance Tax (IHT): This tax is applicable only if the value of the estate of the deceased exceeds the £325,000 threshold. IHT is typically settled by the executor of the estate before assets are distributed to beneficiaries. Therefore, as an inheritor, you usually won't need to pay IHT upon selling the property.

  
  

• Capital Gains Tax (CGT): If the property's value has increased since you inherited it, you may be liable for CGT on the profit made from the sale. The gain is calculated based on the difference between the sale price and the property's market value at the time of inheritance. CGT is paid by the beneficiary.
  

• Income Tax: Income tax does not apply to the proceeds from selling an inherited property. However, if you rented out the property before selling, the rental income received during that period would be subject to income tax.

  
  
  
  

Can Solicitors Assist with Tax Calculations?

Yes, solicitors can provide valuable assistance in calculating both IHT and CGT liabilities. They can ensure accurate valuations and help identify any available reliefs or exemptions, facilitating compliance with tax obligations.

Are Solicitors Required to Pay Tax on Your Behalf?

While solicitors can offer guidance and assist with the preparation of necessary documentation, the responsibility for paying taxes typically rests with the executor (for IHT) or the beneficiary (for CGT). Solicitors do not automatically pay these taxes on your behalf but can facilitate the process if arranged.

What Are the Deadlines for Paying These Taxes?

• Inheritance Tax: IHT should be paid by the end of the sixth month after the person's death. Late payments may incur interest charges.

  
  

• Capital Gains Tax: CGT must be reported and paid within 60 days of the property sale completion date.

Common Mistakes to Avoid When Selling an Inherited Property

Here are some of the most common mistakes we see sellers make and how to avoid them:

1. Overlooking Outstanding Debts and Taxes

Some people assume that selling the property will automatically settle any debts tied to the estate. If there are unpaid mortgages, loans, or tax liabilities, this could cause legal issues.

2. Ignoring Legal and Probate Requirements

Trying to sell before probate (or confirmation in Scotland) is granted can cause delays. Confirm that all legal processes are complete before listing the property to avoid complications.

3. Not Considering All Selling Options

Some sellers only consider traditional estate agents, missing out on faster alternatives. Compare selling through an estate agent, at auction, or to a cash buyer to find the best method for your situation. Express House Buyers Scotland offers a quick, hassle-free sale if speed and piece of mind is your priority.

4. Forgetting to Insure the Property

An empty property is at risk of damage, vandalism, or break-ins, which could cause financial loss. Standard home insurance may not cover an unoccupied property. We always advise sellers to take out vacant property insurance to protect it until the sale is complete. This ensures you’re covered in case of unexpected issues.

Sell Your Inherited Property with Confidence

Selling an inherited property can be complex, but following the right steps makes it easier. Start by checking the will, applying for probate if needed, and settling any debts or taxes. Next, get a valuation to understand the property's worth and choose the best selling method—estate agent, auction, or a fast cash sale with Express House Buyers Scotland.

Taking the right approach ensures a smooth, profitable sale. Need expert help? Express House Buyers Scotland offers a free no-obligation valuation within 48 hours and a quick, hassle-free sale. Contact us today to get started!

FAQs: How to Sell an Inherited Property in Scotland

1. How to avoid Capital Gains Tax on inherited property?

You may be able to reduce or avoid Capital Gains Tax (CGT) when selling an inherited property by:

• Selling the property at the same value as the probate valuation (no gain means no CGT)

• Living in the property as your main residence before selling (this may qualify for Private Residence Relief).

• Offsetting allowable expenses like solicitor fees and estate agent fees

• Using your annual CGT allowance (£6,000 for individuals in 2024/25)

2. Can you sell a property before probate/confirmation?

No, you cannot legally complete the sale before probate (confirmation in Scotland) is granted. However, you can market the property and accept an offer while waiting for confirmation.

3. How long after probate can you sell a property?

You can sell an inherited property immediately after probate (or confirmation) is granted. However, the process of getting confirmation can take several months.

4. Do you pay Inheritance Tax on a house before selling it?

Inheritance Tax (IHT) is due within six months of the person’s death, regardless of whether the property has been sold. If there aren’t enough funds in the estate, executors may need to take out a loan or arrange a payment plan with HMRC.

5. Do executors pay Capital Gains Tax?

If an executor sells the property before transferring it to beneficiaries, the estate is responsible for any CGT. If the beneficiaries sell it later, they must pay CGT on any increase in value.

6. What happens if the property you have inherited is mortgaged?

If the inherited property has an outstanding mortgage, you must:

• Pay off the mortgage using estate funds or other assets

• Take over the mortgage (if the lender allows it)

• Sell the property to clear the debt.If the mortgage is larger than the property’s value, the estate may be declared insolvent, and legal advice is needed
  

Still have questions? Express House Buyers Scotland can guide you through selling an inherited property quickly and hassle-free. Get in touch today!