Inheriting property from your parents often happens during a period of sadness. If a loved one has passed away, the new asset in your ownership is usually a small consolation.
Furthermore, figuring out what to do with it can be not easy if it’s a family home that you have inherited alongside your siblings. You and your brothers/sisters may have different opinions about what to do with it – should it be sold or bought? And how easy is this to do?
In the blog below, we’ve provided a clear guide on how to sell if you’ve inherited property with your siblings. Keep reading to find out.
How to sell if you’ve inherited property with siblings
The simplest way to sell an inherited property with your siblings is to divide the earnings between you in proportion to your respective ownership of the house. For example, if the property is sold at £300,000 and is split equally between the three of you, you will each get £100,000.
Depending on the condition of your property, you may need to decide between selling on the open market, going directly to a cash house buyer, or using an auction house.
Alternatively, if there are disagreements between siblings about whether to sell the house at all, one/some of you could buy out the others. This would enable the person who wants to sell to cash in immediately, while the others retain ownership. This route can be difficult, though, as it requires you to raise enough capital to buy out the others – which is not going to be cheap.
What determines how much each sibling gets?
The terms of the Will dictate how much each child gets from the estate. If a property is being passed down, ownership will not necessarily be separated equally between all three children – it may only be given to some of the children, or it may be given to all of them in varying amounts.
Can I buy out my sibling’s share of the property?
Yes, you can buy out your sibling’s share of the property, if they agree to do so. An agreement can also be made between the two parties, if someone wants it to be at a higher or lower rate.
Can my siblings force me to sell the house?
Most siblings aim to reach a common agreement about what to do with an inherited property. If three siblings and two people want to sell, the third person may feel obligated to go along with it if they cannot afford to buy out the others.
However, you can apply to the court for an ‘Order of Sale’ if you do not want the transaction to proceed. In this instance, you must make a compelling argument about why it should be sold, and the court will decide.
You should get legal support when applying for this. However, it is likely to cost you a reasonable sum of money.
How much inheritance tax do we need to pay?
In the UK, the inheritance tax rate is currently 40%. This is only charged on the part of your estate that’s above the tax-free threshold, which is currently £325,000.
You should speak to a solicitor who can provide support with calculating the amount of inheritance tax due on the estate you inherit, as well as making sure all relevant tax is paid.
Pros and cons of keeping a probate property
When you inherit a family home alongside your siblings, you have two main options: retaining ownership of it or selling it. Both routes have advantages and drawbacks, and the one you opt for will likely vary depending on your circumstances.
By keeping the property, one of you may be able to live in it yourself. This might be ideal if someone is currently having financial difficulties or doesn’t have a consistent place to live.
Retaining ownership of the house may also enable you to rent it out, creating additional income for both you and your siblings.
However, keeping ownership of the property may require spending money and time fixing it up. If you remain as a landlord moving forward, this can involve ongoing maintenance as you tend to the needs of your tenants. Whether you decide this lifestyle appeals to you depends on your proximity to the property, how much free time you have, and more.
Pros and cons of selling a probate property
On the other hand, selling your probate property can enable you and your siblings to cash in and use the money for things that are more important to you. This might include upsizing your existing school, paying for a family vacation, funding your children to private school, or something else.
Selling the house may also be much more convenient. If you all live far away from the property, then fixing it up (if it’s in bad condition) may be a hassle. Likewise, you and your siblings may not have the time or inclination to become landlords by renting out the property.
Even if the house is in terrible condition, you can still sell your probate property to a cash buyer – although it might not be for as much money as you might get in good condition on the market.
Selling your probate property may also involve saying goodbye to a house that has been in your family for generations. This is not often an easy thing to do.
The sooner you sell the property, the less you will be able to benefit from it increasing in value (which, statistically, is likely to happen over a long period of time). It may be a smarter long-term investment decision to hold onto the property for as long as you can, even if it means that you have to pay capital gains tax further down the line.
Is it more difficult to sell a probate property?
Your probate property will be easier to sell, if it is in excellent condition. If you can tidy up the property and make it look attractive, this may result in a profitable sale at the typical market rate.
However, certain features may decrease the value of the property. Firstly, if it is in poor condition or has a short lease term remaining on it, it may impact how many people want to buy it and what price you can expect.
If an outdated construction method was used for the building, this may also have an impact. Not only could extensions be impossible, but they may negatively affect the EPC rating or – in some of the worst scenarios – prevent a bank from offering a mortgage on the property.
If any of these outdated, problematic features apply, then it may save you time and effort to sell to a cash house buyer, who will purchase it in any condition.
