Tax, probate and mortgages

The death of a loved one is ranked the most stressful life event. Dealing with grief takes a huge toll emotionally and physically. But what happens when you combine that grief with the stresses of inheriting a property?

And what does it actually involve? The formal process won’t happen overnight, which in a state of bereavement, might feel like a blessing or a curse. But the drawn-out proceedings are in place for good reason…

The legal bit

If the property has a mortgage, you’ll need to contact the lender to inform them the mortgage holder has passed away as soon as you can.

If you’re the executor of your loved one’s will, this will be straight forward. If no will was left, the court must appoint one. You can apply for a grant of representation, which confirms your legal status and ability to deal with your loved one’s estate (a person’s property, savings, investments and belongings).

Probate – a legal process in the courts to deal with a loved one’s estate – can take up to a year whilst the will is verified, assets are sorted, debts cleared, taxes paid and beneficiaries (a person named to inherit in a will) are given their share of the rest, which might include a property.

The Government has warned that the Covid-19 pandemic may cause further delays in court proceedings, including probate. But you can start the process yourself now, or pay a solicitor or specialist to do it on your behalf.


Lenders usually allow a grace period and monthly payments on your loved one’s mortgage are typically frozen (usually the duration of probate). Be mindful that interest may still accrue in that time, so it’s worth checking what the exact details are, and what the lender expects from you now, and when probate is finalised.

Once the executor has settled any debts, taxes and legal fees are paid, probate will be complete, and the property will become yours with a notification to the Land Registry.

If there is still a mortgage on the house you’ve inherited, there are a few ways you can settle it.

· Use the life insurance policy of the deceased

· Sell their valuable items (e.g. jewellery, artwork, furnishings)

· Use your own savings

· Re-finance the property

· Rent it to a tenant

· Sell it on the open market

· Or, sell it quickly to a specialist company like ours

We buy properties in cash and can complete a sale in as little as two weeks – our average offer is 80 per cent of the current market value of the house. We’ll even cover your legal costs if you use our solicitors.

You can learn exactly how easily you can complete a property sale with us with confidence and ease here.


The amount of inheritance tax that will need to be paid during probate depends on the value of the estate. Anything under £325,000 and nothing will be due. Anything above is liable to 40 per cent tax.

e.g. if the value of the estate is £400,000, tax at a rate of 40 per cent will be due on £75,000.

That threshold increases to £500,000 if a home was gifted to the deceased’s children or grandchildren. This can include step, adopted or foster children.

Capital gains tax

If you sell the property you inherit as a beneficiary of a will, and that house increases in value between the time you inherit and sell, capital gains tax will be due on the profit.

Everyone has an annual tax-free capital gains threshold of £12,000.

If the profit (capital gains) is above £12,000, and you pay the basic rate of tax on your usual income, your capital gains tax will be 18 per cent.

If you are a higher or additional rate taxpayer, the rate of tax rises to 28%.

But, if you decide to move into the property and it becomes your main residence, no capital gains tax will be due when you sell it.

Income tax

This is only due if you start earning money on an inherited property, for instance, if you rent it to tenants. For more information, visit and search ‘death and bereavement.’

Dealing with probate issues can be a stressful process, but we’re here to answer any questions you have about selling a property to us for cash. Contact us on 0207 4499797 or