Property Finance & Investment
Selling inherited property: probate, CGT, tenants | August
Selling an inherited property: what UK landlords need to know
Selling an inherited property in the UK involves three stages: securing legal authority through a grant of probate or letters of administration, settling the tax position, and completing the sale itself. For landlords there is often a fourth, because inherited properties frequently come with tenants in place, and since 1 May 2026 the Renters' Rights Act 2025 governs how possession can be recovered before a sale. This guide explains each stage as the law stands in June 2026, including how capital gains tax is calculated from the probate value and what Ground 1A requires before you can sell with vacant possession. It is not tax or legal advice.
Securing the legal right to sell
You cannot complete the sale of an inherited property until you hold legal authority over the estate. If the deceased left a valid will, the named executor applies for a grant of probate. If there is no will, the rules of intestacy determine who inherits, and a close relative applies for letters of administration, which carries the same authority. Applications are made through gov.uk's probate service, and straightforward estates are typically granted within eight to twelve weeks, though estates with inheritance tax to settle or disputes between beneficiaries take considerably longer.
One exception applies: where the property was held as a joint tenancy, ownership passes automatically to the surviving owner outside the estate, and no grant is needed to sell.
Selling inherited property after probate is the formal sequence, but you do not have to wait for the grant to begin. You can market the property, agree a price and instruct solicitors while the application is pending; only exchange and completion require the grant. Many executors line up a buyer during the wait so the sale can proceed the moment authority arrives. What you cannot do during this period is neglect the property. The estate remains responsible for insurance (standard policies often lapse on unoccupied homes, so specialist unoccupied cover is usually needed), for council tax once any exemption period ends, and, if the property is let, for every landlord obligation owed to the tenants.
Capital gains tax on inherited property
You do not pay capital gains tax when you inherit a property. Capital gains tax (CGT) on inherited property is charged only when you sell, and only on the growth in value between the probate valuation and the sale price. The price the deceased originally paid is irrelevant: any gain made during their ownership is wiped clean at death, which is why the probate valuation matters so much. Agree it carefully, because it is both the figure inheritance tax is assessed on and your base cost for CGT.
How the gain is calculated
Suppose the probate valuation was £300,000 and you sell eighteen months later for £350,000. Your gain is £50,000. From that you deduct selling costs such as estate agent fees and legal fees, plus the cost of any improvements you made (improvements, not repairs), and then your annual exempt amount, which is £3,000 for the 2026/27 tax year. The remainder is taxed at the residential property rates: 18% for gains falling within your basic rate band and 24% above it, per HMRC's current rates. Where a property is inherited jointly, each beneficiary is assessed on their own share and each has their own £3,000 exemption.
Two deadlines apply on sale. You must report and pay CGT on a UK residential property disposal within 60 days of completion through HMRC's online property account, and the gain also goes on your Self Assessment return if you file one. Missing the 60-day window attracts penalties and interest, and it catches out inheritors who assume CGT waits for the January deadline.
How to reduce capital gains tax on inherited property
You cannot avoid CGT on a genuine gain, but four legitimate levers reduce it. Selling soon after probate keeps the gain small or eliminates it entirely, since little time has passed for the value to grow beyond the probate figure. Claiming every allowable cost (agent fees, conveyancing, improvement works) reduces the chargeable gain directly, so keep receipts from day one. Moving into the property and making it your genuine main residence before selling brings Private Residence Relief into play for the period of occupation plus the final nine months of ownership; the gov.uk guidance on tax when you inherit sets out how this interacts with inherited homes. And transfers between spouses or civil partners are made on a no gain, no loss basis, which lets a couple use two annual exemptions and potentially a lower marginal rate. The rules around residence relief in particular are strict on intent and evidence, so take advice before relying on it.
Other taxes when you inherit
CGT is the tax you control. Two others are settled around you, and one applies only if you delay the sale.
Inheritance tax
Inheritance tax is settled by the estate before the property reaches you, charged at 40% on the value above the £325,000 nil-rate band, with up to a further £175,000 residence nil-rate band where a main home passes to children or grandchildren (gov.uk inheritance tax rules, June 2026). It does not reduce your sale proceeds directly, but it fixes the probate valuation, and that valuation is your CGT base cost. An estate that understated the probate value to no IHT effect can hand the beneficiary a larger CGT bill later.
Stamp duty on inherited property
You pay no stamp duty land tax when you inherit a property. SDLT enters the picture in two indirect ways. First, an inherited property counts towards the additional dwellings test, so if you keep it and later buy another property, the 5% surcharge applies to that purchase; our stamp duty calculator shows the surcharge effect on a future purchase. Second, buying out a co-beneficiary's share can itself attract SDLT once the consideration crosses the threshold, particularly where a mortgage is assumed as part of the deal.
Income tax if you let before selling
Rent received between inheritance and sale is taxable income at your marginal rate, after allowable expenses, exactly as for any other rental. From the date the property vests in you, you are a landlord for tax purposes as well as legal ones, including Making Tax Digital obligations if your property income crosses the threshold.
Inherited property split between siblings
Where a property is inherited by two or more siblings, no individual can force a sale on the open market without agreement or a court order, so the practical first step is a decision everyone signs up to: sell and divide the proceeds, let the property jointly, or have one sibling buy the others out. A buyout needs an independent market valuation, because HMRC treats transactions between connected persons as taking place at market value regardless of the price actually paid. Selling your share to a sibling cheaply does not reduce your CGT; the gain is computed on the market value of the share. Each sibling's portion of any gain is assessed separately against their own £3,000 exemption and their own tax band, which sometimes makes a sale across two tax years worthwhile for the family as a whole. Where agreement cannot be reached, an application to court for an order for sale is the backstop, but it is slow, expensive and corrosive; mediation almost always costs less than the discount a fractured sale attracts.
Selling an inherited property with tenants
An inherited tenancy continues on its existing terms. The tenants' rights are unaffected by the owner's death, and the landlord's obligations transfer to the estate and then to you from the date the property vests. Every private tenancy in England converted to an assured periodic tenancy when the Renters' Rights Act 2025 commenced on 1 May 2026, so whatever agreement the deceased signed, the tenancy you have inherited is periodic, and the Act's possession rules apply to it. The full framework, including every possession ground and the new tenancy structure, is covered in our Renters' Rights Act hub.
Your obligations as the new landlord
From day one you must maintain gas and electrical safety certification, protect and re-serve evidence of any deposit, handle repairs under the Landlord and Tenant Act 1985, and keep collecting rent into the estate or your own account as appropriate. Across the tenancies landlords bring onto August after inheriting them, the most common gap we find at handover is a deposit with no traceable protection certificate, followed closely by a gas safety record that lapsed during probate. Both invalidate possession claims and attract penalties, so audit the paperwork before you do anything else, and keep every certificate in one place with document storage so you can produce it for a buyer, a tenant or a court on demand.
Regaining possession to sell: Ground 1A
Section 21 no longer exists. Since 1 May 2026, the route to vacant possession when you intend to sell is Ground 1A, a mandatory ground introduced by the Renters' Rights Act 2025. Its conditions, as at June 2026, are strict. You must give the tenant at least four months' notice on the prescribed form. The notice cannot expire within the first twelve months of the tenancy, and for tenancies that converted on 1 May 2026 the clock runs from the original tenancy start date, not from commencement. You must genuinely intend to sell and be prepared to evidence it in court, for instance with an estate agency agreement or solicitor instruction. And once you have served the notice, you cannot re-let or re-market the property as a rental for a restricted period running twelve months from the notice expiry; doing so is a criminal offence. That restriction has teeth: if your sale falls through, the property cannot simply go back on the rental market. Ground 1A sits alongside the other post-Act possession routes, covered in our guide to grounds for possession in 2026.
The timing consequence for inheritors is significant. Between the notice period and possible court proceedings, achieving vacant possession of an inherited tenancy realistically takes six months or more, on top of probate.
Selling with the tenants in place
Selling to an investor with the tenancy continuing avoids Ground 1A entirely, preserves the rent through the sale period, and removes the re-letting restriction risk. The trade-off is price: tenanted properties typically sell at a discount to vacant possession value, though a well-documented tenancy with a reliable payment history narrows the gap considerably. Provide buyers with the tenancy agreement, deposit protection evidence, compliance certificates and a clean rent ledger. Our guide to selling with tenants in situ covers marketing, documentation and pricing in detail.
Practical steps to complete the sale
Obtain valuations. Two or three agent valuations establish the marketing price and sense-check the probate figure.
Insure the property. Unoccupied properties need specialist cover; standard policies commonly restrict or void after 30 to 60 days empty.
Clear, clean and repair. House clearance and minor repairs are cheap relative to their effect on offers. Major renovation rarely pays back on an estate sale.
Assemble the paperwork. EPC (required to market), title information, gas and electrical certificates if let, building regulations sign-offs for past works, and details of any mortgage or charges to be settled from proceeds.
Instruct professionals. Choose an agent with probate sale experience and a conveyancing solicitor early; probate sales carry extra title and estate administration steps that generalists handle slowly.
Choose the sale route. Open market through an agent maximises price. Auction trades price for speed and certainty, and suits poor-condition stock. Cash buying companies are fastest of all but at a meaningful discount; treat them as a last resort, not a default.
Plan the timing. Selling close to the probate valuation minimises CGT, but a forced winter sale can cost more in price than it saves in tax. If the gain is large, straddling tax years across joint owners can use multiple exemptions.
Should you sell or keep an inherited rental?
The financial test is the same as for any rental: net yield after costs and tax against what the released equity would earn elsewhere, plus realistic capital growth prospects for the area. Run the numbers through our rental yield calculator before deciding, and remember that as a higher-rate taxpayer your rental profit is taxed at 40% while your eventual gain is taxed at 24%. Landlords who come to August after inheriting consistently tell us the decision turned less on the spreadsheet than on appetite: whether they wanted the compliance, tenant relations and admin that come with the asset. If you do keep it, set the systems up properly from the start; accurate rent tracking gives you the income records both HMRC and any future buyer will ask for. For the full sell-or-rent decision framework, see our guide to selling a rental property.
Common questions about selling inherited property
Do I pay capital gains tax if I sell my inherited property to my sibling?
Yes, on the same basis as a sale to a stranger. Because siblings are connected persons, HMRC substitutes market value for the actual price, so selling cheaply to family does not reduce the gain. The gain is the market value of your share minus the probate value of your share, less your costs and annual exemption.
Is there a time limit on selling inherited property?
No. You can hold the property indefinitely, let it, live in it or sell whenever you choose. The pressure is economic rather than legal: the longer you hold, the more the value can grow beyond the probate figure and the larger the eventual CGT bill, and unoccupied properties carry insurance and council tax costs in the meantime.
What documents do I need to sell an inherited property?
The grant of probate or letters of administration, the title information from the Land Registry, a valid EPC, and, if the property is let, the tenancy agreement, deposit protection certificate, gas safety record and EICR. Your solicitor will also prepare the standard property information forms. Having the file complete before listing prevents the delays that cause probate sales to fall through.
If you are managing an inherited rental through probate and beyond, you can start with August for free and keep the rent, compliance and documents in one place from day one.
Disclaimer: This article is a guide and not intended to be relied upon as legal, tax 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 (June 2026). Always speak to a suitably qualified professional if you require specific advice.
Author
August Team
The August editorial team lives and breathes rental property. They work closely with a panel of experienced landlords and industry partners across the UK, turning real-world portfolio and tenancy experience into clear, practical guidance for small landlords.
