What do I need to know about selling an inherited property?

Inheriting property in the UK brings both opportunity and obligation. Whether you've inherited a rental property from a parent or received an estate through probate, understanding the tax implications, legal requirements, and practical steps involved can help you make informed decisions about whether to sell, keep, or rent the inherited property.

This article covers everything UK landlords need to know about selling inherited property, from capital gains tax calculations to managing existing tenants, helping you navigate the process efficiently whilst maximising your financial position. Importantly this is not tax or legal advice.

Understanding inheritance and probate

Before you can sell an inherited property, you need to understand the legal framework governing inheritance in the UK. The probate process establishes legal ownership and ensures the deceased's wishes are carried out properly.

The probate process for inherited property

Probate is the legal process of administering someone's estate after they die. If you're the executor named in the will, you'll need to apply for a grant of probate, which gives you the legal authority to deal with the property. This process typically takes 9-12 months in England and Wales, though complex estates can take longer.

During probate, you'll need to value the estate, pay any outstanding debts, settle inheritance tax if applicable, and distribute assets according to the will. The property forms part of this estate valuation, and you cannot legally sell it until probate is granted unless it's jointly owned property where ownership automatically passes to the surviving owner.

For landlords inheriting rental property with existing tenancies, the probate period can be particularly complex. You'll need to continue managing the property, collecting rent, and meeting landlord obligations even before probate completes. Property management software can help you stay organised during this transitional period, ensuring compliance and proper financial tracking.

Multiple beneficiaries and shared ownership

If the property is inherited by multiple siblings or family members, selling becomes more complicated. All beneficiaries must agree to the sale, and disagreements can cause significant delays. One option is for one sibling to buy out the others, allowing them to keep the property as a rental investment.

When selling an inherited property to a sibling, proper valuation is crucial to ensure fairness and avoid future disputes. You'll still need to consider capital gains tax implications, though the calculations may differ if selling to a family member at below market value.

Capital gains tax on inherited property

Understanding capital gains tax is essential when selling inherited property. Unlike other property sales, the tax calculation for inherited property has unique characteristics that can significantly impact your financial outcome.

How to calculate capital gains tax on inherited property

Capital gains tax (CGT) on inherited property is calculated based on the increase in value from the date of death to the date of sale, not from when the deceased originally purchased it. This "stepped-up basis" can significantly reduce your tax liability compared to if you'd owned the property throughout.

Here's how it works. If the property was valued at £300,000 when you inherited it and you sell for £350,000, your capital gain is £50,000. You'll then deduct your annual CGT allowance (£3,000 for the 2024/25 tax year) and any allowable expenses like estate agent fees, legal costs, and improvement costs. The remaining gain is taxed at 18% for basic rate taxpayers or 24% for higher rate taxpayers on residential property.

A capital gains tax calculator can help you estimate your liability accurately. Remember that if you sell within the probate valuation period, usually within a few months of death, there may be little or no capital gain, potentially saving you thousands in tax.

How to avoid capital gains tax on inherited property

While you can't avoid CGT entirely if you make a profit, there are legitimate ways to reduce your liability:

Live in the property first - If you move into the inherited property and make it your main residence before selling, you may qualify for Private Residence Relief, which exempts the final 9 months of ownership from CGT. Living there for a period beforehand extends this relief proportionally.

Time your sale strategically - Selling quickly after inheritance minimises the opportunity for value appreciation and therefore reduces the taxable gain. This is particularly effective if you complete the sale within the probate valuation period.

Claim all allowable expenses - Deduct estate agent fees, solicitor costs, stamp duty if they have been paid during probate, and any money spent on repairs or improvements that added value. Keep detailed records of all expenses related to the property sale.

Use your annual exemption - The £3,000 annual CGT allowance applies to all your capital gains, not just property. If you can spread the sale proceeds across tax years or have made losses elsewhere, you might reduce your liability.

Consider giving equity to a sibling - If multiple people inherit, selling your share to a sibling might have different tax implications than selling to a third party, though you'll need professional advice on this strategy.

For landlords considering whether to keep the inherited property as a rental investment, understanding these tax implications helps you make informed decisions. The tax treatment differs significantly between selling immediately and holding the property long term.

Tax implications and financial planning

Beyond capital gains tax, inheriting property triggers several other tax considerations that UK landlords must understand to avoid unexpected bills and maximise their financial position.

Inheritance tax on the estate

Inheritance tax (IHT) is charged on the estate before you receive the property, not when you sell it. The standard IHT rate is 40% on anything above the £325,000 threshold, though additional allowances apply for main residences passed to direct descendants.

If the estate has already paid IHT, this doesn't directly affect your sale proceeds, but it's important to understand because it impacts the property's basis for CGT calculations. The probate valuation, which determines IHT, also becomes your starting point for calculating capital gains when you eventually sell.

Income tax implications if renting

If you decide to rent out the inherited property rather than selling immediately, you'll owe income tax on the rental income. This follows the same rules as any buy-to-let property, with rental income taxed at your marginal rate after deducting allowable expenses.

Understanding your rental yield becomes crucial when deciding whether to keep or sell inherited property. A high yielding property in a strong rental market might justify holding it, particularly if selling immediately would trigger significant CGT.

Many landlords use rent tracking tools to monitor income accurately, which is essential for tax returns and helps you assess whether the property is generating sufficient returns to justify keeping it in your portfolio.

Stamp duty considerations

When you inherit property, you don't pay stamp duty on the inheritance itself. However, if you already own property and decide to keep the inherited property as a second home or investment, you'll face the higher stamp duty rates (additional 5% surcharge) if you later purchase another property.

This can create strategic considerations for landlords building portfolios. Selling the inherited property before purchasing additional investment properties might save significant stamp duty, whilst keeping it increases your exposure to the additional property surcharge on future purchases.

Managing inherited rental property with tenants

Many inherited properties come with existing tenancies, creating immediate landlord responsibilities even if you're still deciding whether to sell. Understanding your obligations and options is crucial for compliance and maintaining good tenant relationships.

Your responsibilities as the new landlord

When you inherit a rental property with tenants in situ, you automatically assume all landlord responsibilities from the date of death, though you can't make major decisions until probate is granted. You must continue to:

Ensure safety compliance - All gas safety certificates, electrical certificates, and other compliance documents must remain current. If certificates are approaching expiry during probate, you'll need to arrange renewals.

Collect and protect rent - Rent continues to be due, and you must ensure tenant deposits remain protected in a government-approved scheme. If you're unsure about the deposit protection status, check immediately to avoid penalties.

Handle maintenance requests - You're responsible for repairs and maintenance under the Landlord and Tenant Act 1985, even during the probate period. Delays can lead to compensation claims or legal issues.

Maintain proper documentation - Keep detailed records of all income, expenses, and communications. This is essential for both tax purposes and proving you've met your legal obligations. Using document storage systems helps you stay organised during this complex period.

Serving notice to existing tenants

If you decide to sell with vacant possession, you'll need to serve appropriate notice to end the tenancy. For assured shorthold tenancies (ASTs), this typically means serving a Section 21 notice, giving tenants at least two months' notice.

However, you cannot serve Section 21 during the first four months of a fixed-term tenancy, and various compliance requirements must be met first. All safety certificates must be current, deposits must be properly protected, and the tenant must have received the government's "How to Rent" guide. Missing any of these requirements makes your Section 21 invalid.

Alternatively, if tenants are in breach of contract, you might serve a Section 48 notice alongside a Section 8 notice for specific grounds like rent arrears. However, selling the property isn't grounds for Section 8 eviction, so Section 21 is typically the appropriate route.

For landlords unfamiliar with the eviction process, seeking legal advice is worthwhile. The costs of getting it wrong, invalid notices requiring you to start again, compensation claims, or properties you cannot legally sell with vacant possession, often exceed the cost of proper legal guidance. Also remember to take into account the changes being introduced in 2026 with the Renters' Rights Act.

Selling with tenants in place

Selling an inherited property with tenants in situ is possible and sometimes advantageous. Buy-to-let investors often prefer properties with existing tenants as it provides immediate rental income and demonstrates the property's letting potential.

However, properties sell for less with tenants in place, typically 15-20% below vacant possession value, because buyers face limited options for the property's use and must continue honouring the existing tenancy terms. For landlords inheriting high yielding property with reliable tenants on long-term contracts, this might still be the optimal route.

When marketing property with tenants in place, transparency is crucial. Provide complete tenancy documentation, rent payment history, and compliance certificates to potential buyers. Properties with well documented, compliant tenancies are more attractive to investors than those with unclear tenant arrangements or missing paperwork.

Practical steps for selling inherited property

Moving from decision to completion requires careful planning and execution. Understanding the practical steps involved helps you avoid delays, reduce costs, and maximise your sale proceeds.

Getting the property ready for sale

Before listing the property, assess its condition honestly. Inherited properties, particularly those where elderly relatives lived, often need updating or repairs. While you don't need to undertake major renovations, addressing obvious maintenance issues and presenting the property well increases buyer interest and achievable prices.

Consider these priorities:

Deep cleaning and decluttering - Remove personal possessions, arrange proper house clearance if needed, and ensure the property is presented in its best light. This relatively low cost step can significantly impact sale prices.

Essential repairs - Fix obvious issues like leaking taps, broken fixtures, or damaged flooring. Buyers will either negotiate down the price or walk away from properties needing extensive repairs.

Compliance documentation - Gather all relevant paperwork including Energy Performance Certificates (EPCs), gas safety records, electrical certificates, and building regulation certificates for any works completed. Missing documents create delays and buyer concerns.

Mortgage and charge checks - Verify whether any outstanding mortgages, secured loans, or charges are registered against the property. These must be settled from sale proceeds, so knowing the exact amounts helps you calculate net proceeds accurately.

For inherited rental properties, maintaining compliance tracking throughout this process ensures you don't inadvertently let important certificates lapse during the sale period, which could jeopardise the transaction or expose you to penalties.

Choosing estate agents and conveyancers

Selecting the right professionals can significantly impact both your sale price and the smoothness of the transaction. When choosing estate agents:

Compare fees and services - Agent fees typically range from 1-3% plus VAT. Higher fees don't always mean better service, so compare the marketing package, local expertise, and track record carefully.

Check local market knowledge - An agent familiar with your specific area understands local buyers, comparable properties, and realistic pricing, leading to faster sales at better prices.

Understand sole versus multiple agency - Sole agency is usually cheaper but limits your property's exposure. Multiple agency costs more but increases visibility, which might be worthwhile for unique or high value properties.

For conveyancing, choose solicitors experienced in inherited property sales, as these transactions have additional complexities around probate and estate administration. Fixed-fee conveyancing offers cost certainty, typically ranging from £800-£1,500 plus disbursements.

Timing your sale

When you sell matters significantly for tax purposes. Selling within the probate valuation period often minimises capital gains tax because property values won't have increased substantially. However, this might not align with optimal market conditions.

Consider these timing factors:

Market conditions - Spring and early autumn typically see higher buyer activity and better prices. Rushing to sell in November might cost you thousands compared to waiting for spring.

Tax year planning - If the capital gain will be substantial, consider whether selling just after the tax year end (6 April) might allow you to utilise two years' worth of CGT allowance, or whether selling quickly minimises the gain regardless of timing.

Tenant situations - If you need vacant possession, factor in notice periods and potential court proceedings if tenants contest. This can add 6-12 months to your timeline.

Personal circumstances - If multiple beneficiaries are involved, coordinate timing to ensure everyone's circumstances are considered, particularly if some need proceeds quickly whilst others prefer to wait for better market conditions.

Deciding whether to sell or keep inherited property

The decision to sell or retain inherited property isn't purely financial, emotional factors, practical considerations, and long term goals all play a role. However, approaching the decision systematically helps you make choices you won't regret.

Financial analysis of keeping versus selling

Start by calculating the true cost and return of keeping the property:

Rental yield analysis - Calculate gross and net rental yield by dividing annual rent by property value. Compare this to alternative investments like stocks, bonds, or other property opportunities. A property yielding 4% gross might deliver only 2-3% net after all costs, which might underperform simpler investment alternatives.

Ongoing costs - Factor in maintenance, insurance, letting agent fees if not self-managing, mortgage interest if applicable, and your time. Many inheritors underestimate the true cost of property ownership, particularly properties requiring substantial maintenance.

Capital appreciation potential - Research local market trends. A property in an area with strong growth prospects might justify lower rental yields, whilst properties in declining areas might not appreciate sufficiently to justify the hassle and costs of ownership.

Tax efficiency - As a higher-rate taxpayer, rental income is taxed at 40%, significantly reducing net returns. Compare this to capital gains tax at 24% on eventual sale. For some landlords, selling quickly and investing proceeds elsewhere creates better after-tax returns.

Using local insight helps you model different scenarios objectively, removing emotional attachment from the decision-making process.

Emotional and practical considerations

Beyond numbers, consider these factors:

Family significance - Inheriting your childhood home or a property with strong family connections creates emotional complications. Whilst these feelings are valid, ensure they don't override sound financial analysis. Sometimes the best way to honour family legacy is converting property into assets that better serve your actual needs.

Time and expertise - Being a landlord requires time, knowledge, and temperament. If you're already busy, lack property management experience, or find the idea of dealing with tenants stressful, selling might provide peace of mind that outweighs any financial benefit of keeping it.

Portfolio diversification - If the inherited property represents a large proportion of your wealth, selling and diversifying into multiple asset classes might reduce risk, even if the property appears to be a decent investment on its own.

Geographic factors - Managing rental property far from where you live creates additional challenges. Unless rental income substantially exceeds professional management costs, distant properties often aren't worth the hassle.

For landlords who decide to keep inherited property, modern property management platforms can significantly reduce the administrative burden, making portfolio management more achievable alongside other commitments.

Getting professional advice and support

The complexity of selling inherited property, combined with the significant financial implications of getting it wrong, makes professional advice worthwhile for most people. Understanding when and how to seek help ensures you make informed decisions whilst avoiding costly mistakes.

When to consult tax specialists

You should consider consulting a tax specialist if:

The property has increased significantly in value - Large capital gains trigger substantial tax bills, and specialist advice on timing, reliefs, and planning can save thousands of pounds. The cost of advice is tax deductible against your capital gain.

Multiple beneficiaries are involved - Tax planning becomes more complex with multiple owners, particularly if you're selling shares to siblings or considering different exit strategies for different owners.

You're unsure about the probate valuation - If you suspect the probate valuation was incorrect, challenging it might reduce your eventual CGT bill. However, this requires professional valuation evidence and HMRC approval.

You're considering living in the property first - Private Residence Relief can save substantial tax, but the rules are complex, particularly if you maintain another property simultaneously. Professional guidance ensures you don't inadvertently lose relief you're entitled to.

A qualified chartered accountant or tax adviser specialising in property and inheritance can provide tailored guidance that far exceeds the cost of their services, particularly for higher value properties or complex situations.

Legal support for property sales

Whilst DIY conveyancing is technically possible, the legal complexities of inherited property sales make professional legal support highly advisable. Solicitors handle:

Title verification - Ensuring you have clear legal title to sell the property, resolving any issues with the Land Registry records, and confirming no unexpected charges or restrictions affect the property.

Contract preparation - Drafting accurate contracts that protect your interests whilst meeting legal requirements, particularly important when selling property with tenants or unusual features.

Compliance with regulations - Ensuring all required disclosures, certificates, and documentation are provided to buyers, reducing the risk of future claims or transaction collapse.

Proceeds distribution - If multiple beneficiaries are involved, solicitors ensure sale proceeds are distributed correctly according to the will or agreement, providing protection against future disputes.

Fixed-fee conveyancing provides cost certainty and typically ranges from £800-£1,500 depending on property value and complexity, plus disbursements for searches, Land Registry fees, and similar costs.

Using property management tools during transition

Even if you plan to sell inherited property, you may need to manage it for months during probate, marketing, and sale completion. Having proper systems in place protects you from compliance issues and makes management significantly easier.

August's platform helps landlords inheriting property by:

Tracking compliance deadlines - Automated reminders for certificate renewals based on the expiry dates of documents you upload, insurance renewals, and other critical dates ensure nothing slips through the cracks during this busy period.

Managing tenant communications - Centralised maintenance tracking and communication logs provide clear records of all interactions, essential if disputes arise or you need to demonstrate you've met your obligations.

Financial organisation - Automated rent tracking and expense logging provides accurate records for tax returns and helps you calculate the property's true profitability when deciding whether to keep or sell.

Document storage - Secure document management ensures you can quickly provide certificates, tenancy agreements, and other paperwork to buyers, solicitors, or authorities as needed.

For landlords managing multiple properties alongside inherited property, having a centralised platform prevents administrative overload and ensures inherited property receives the same professional management as your existing portfolio.

Common questions about selling inherited property

Throughout the process of inheriting and potentially selling property, certain questions arise repeatedly. Understanding these common concerns helps you navigate the process with greater confidence.

Do I pay capital gains tax if I sell my inherited property to my sibling?

Selling inherited property to a sibling is treated the same as selling to any buyer for CGT purposes. You'll still calculate capital gains based on the difference between probate valuation and sale price. However, if you sell to a sibling at below market value, HMRC may consider this a gift, triggering different tax implications.

If you genuinely sell at market value to a sibling, there's no special treatment. But if you transfer your share as a gift, you might still be liable for CGT based on the market value, even though you received less. This is designed to prevent people avoiding tax by artificially suppressing sale prices in family transactions.

Professional tax advice is essential when selling to family members to ensure you structure the transaction correctly and understand all tax implications before proceeding.

Is there a time limit on selling inherited property?

There's no legal requirement to sell inherited property within any specific timeframe. You can keep it indefinitely, rent it out, live in it yourself, or sell whenever you choose. However, from a tax perspective, selling quickly after inheritance can be advantageous as it minimises capital gains.

The probate valuation typically occurs within 6 months of death, and selling during this period often means little or no capital appreciation has occurred, reducing or eliminating CGT liability. Wait several years, and property value increases create taxable gains you wouldn't face by selling sooner.

For landlords inheriting property as part of a wider portfolio strategy, timing the sale around market conditions, personal tax situations, and portfolio rebalancing often matters more than rushing to complete the sale immediately.

What documents are required for selling inherited property?

To sell inherited property, you'll need:

Grant of probate - Proving you have legal authority to sell the property. Without this, the sale cannot proceed.

Property title deeds - Usually held electronically by the Land Registry, but older properties may have paper deeds that need locating.

Energy Performance Certificate (EPC) - Required by law when marketing any property for sale, valid for 10 years from issue.

Compliance certificates - If the property is let, provide gas safety records, electrical installation condition reports, and any other relevant certificates to demonstrate compliance.

Tenancy documentation - If selling with tenants in place, buyers will want to see tenancy agreements, rent payment history, deposit protection certificates, and correspondence.

Property information forms - Your solicitor will help complete these, covering information about boundaries, disputes, alterations, and other matters affecting the property.

Having organised documentation speeds up the sale process significantly and reduces the risk of transaction collapse due to missing paperwork or compliance issues.

Your next steps to take action

Whether you've recently inherited property or are planning ahead, understanding the tax implications, legal requirements, and practical steps involved helps you make confident, informed decisions that align with your financial goals and personal circumstances.

Start by getting the property professionally valued to understand your position. This helps you calculate potential capital gains tax, assess rental yields if considering keeping it, and determine realistic sale prices if you decide to sell. Multiple valuations from local estate agents provide useful market perspectives at no cost.

Next, gather all documentation relating to the property, including compliance certificates, tenancy agreements if let, and any paperwork from the estate administration. Organised records make everything easier, whether you're selling, renting, or simply maintaining the property during probate.

Consider your overall financial situation and goals. Does keeping this property align with your investment strategy, or would selling and reinvesting proceeds elsewhere better serve your objectives? Factor in tax implications, ongoing costs, and the time commitment required for property management.

If you decide to keep inherited property as a rental investment, setting up proper systems from the start prevents future complications. Modern landlord software platforms automate routine tasks, ensure compliance, and provide the professional management standards today's regulatory environment demands.

For those selling, engage quality professionals early, estate agents with local expertise, solicitors experienced in probate sales, and tax advisers who can guide you through the CGT implications. The cost of good professional advice is invariably less than the cost of mistakes or missed tax planning opportunities.

Finally, don't rush decisions under pressure. Whilst there may be tax advantages to quick sales, taking time to understand your options and make considered choices usually produces better long term outcomes than hasty decisions made during emotional and stressful periods.

Inheriting property is a significant life event that brings both opportunities and responsibilities. With proper planning, professional guidance, and the right tools, you can navigate the process successfully and make decisions you'll feel confident about for years to come.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Every effort was made to be accurate at the time of writing. Always speak to a suitably qualified professional if you require specific advice or information.