Understanding Inheritance Tax on a House

The time after a close family member passes away can be chaotic and disorienting for anybody. When you find yourself in charge of an estate or possession of a property because of your family member’s final will and testament, it can feel even more chaotic. A million questions might run through your mind. How do I handle this? What are my responsibilities? What do I do with this property?

As the dust settles and the estate of the deceased enters the probate process, a more prominent concern may soon appear — the potential for inheritance tax. All estates over a certain threshold must pay a tax to the government. When an estate includes a home, the likelihood that it will surpass the inheritance tax threshold increases. What do you need to know about what you could owe, and what can you do about the bill?

When Does a House Attract Inheritance Tax?

Homes passed from an individual to direct family members, such as a husband, wife, or civil partner, do not accrue any inheritance tax. There are other situations in which a homeowner can avoid inheritance tax by giving the home away as a gift during their lifetime. Otherwise, the value of the house counts towards the total value of the estate. The law sets a taxable estate value threshold of £325,000. If the estate is worth more than that amount, you will owe inheritance tax.

How Estates Are Valued

Neither the government nor the probate court plays a role in determining the precise value of the estate you oversee. Instead, you must do so yourself. An individual’s entire estate will include things such as funds remaining in bank accounts, stocks and investments, and any payments available from active life insurance policies. You must also estimate the value of the deceased’s property, including any real estate, to include in the grand total of the estate. During this process, you must also determine what debts the deceased owed, if any, and settle outstanding obligations of the estate. These expenses reduce the overall value of the estate. As a result, the valuation process can take more than half a year in many cases.

How Can I Pay the Inheritance Tax on a House?

This question is tricky, and many individuals find themselves facing it without a clear answer. Depending on the value of the home and the overall estate, the inheritance tax could be substantial. If there are not sufficient liquid assets within the estate to cover the balance, you may need to begin the process of liquidating portions of the estate’s other holdings. This sale could include the home, for example. Since the proceeds of real estate sales are often quite large, it is usually enough to fund the expense of paying inheritance tax. However, that brings in another complicating factor — the fact that you may feel your actions dictated by the ticking clock of the law.

When Will I Owe Inheritance Tax on the House?

Generally speaking, you will owe inheritance tax starting from six months after your loved one’s date of death. That does not mean that the full amount of tax comes due on that date, however. Instead, the government only expects you to begin making payments by that date. After all, the entire estate’s valuation may not be complete within six months. Alongside this responsibility, you must also submit the final estate tax forms with your figures within one year following the death. A trustworthy solicitor of your choice can help to streamline this process and make understanding your responsibilities easier.

Selling a House You’ve Inherited – What to Know

Once you decide to sell the property held within the estate to fund the inheritance tax, you stand at the beginning of a potentially lengthy process. One thing is important to note — you cannot necessarily sell the home immediately. If you do not yet have a court-issued Grant of Probate, you cannot officially take action to sell the house. Once you’ve received the Grant, however, you can choose to pursue whichever methods of sale you prefer. Some try to list the home on the open market to receive an offer as close to the current market value as possible, but this can be too slow when inheritance tax is due.

Is There a Faster Way to Handle This Process?

Instead of listing the home with an agent and entertaining buyers for weeks or months, you may choose to seek out a cash offer from a well-backed buying company instead. With a Grant of Probate, you can pursue this process with very few delays compared to the traditional sale route. When working with a reputable company and your solicitor, you could have an offer in hand in as little as 24 to 48 hours after submitting details about the property. Should you decide to accept the offer, which buyers base on a fair evaluation of the market, the home’s location and condition, and other factors, you could have cash within days. That will let you quickly pay the inheritance tax and potentially even replenish the estate’s accounts with any remaining funds.

Find Fast Help Today

With Fast & Fair House Buyers, it is easy to take care of your inheritance tax concerns via a quick all-cash offer on the property you received in the inheritance. Provided you have received the necessary Grant of Probate, we can work quickly towards closing a fair and reliable sale. There’s no need to worry about dealing with the banks or worrying about mortgage approvals, and there’s very little you need to do in the way of preparing the home for sale. That makes this the ideal way to generate the cash necessary to pay the estate’s inheritance tax and move towards finally resolving the final affairs of your departed loved one.

Learn more about the process we use now, or use the form below to contact us today to start the process of receiving a no-obligation cash offer on your home.

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